5 Smart Tips To Help You Rebuild Credit After A Bankruptcy
If you have recently filed for bankruptcy, it can be difficult to know where to start when it comes to rebuilding your credit. Bad credit loans are an option.
Don’t worry; we are here to help! This blog post will discuss five smart tips to help you rebuild credit. Follow these tips, and you will be well on your way to a good credit score!
Rebuild Credit After Bankruptcy
1. Get a secured credit card.
If you have bad credit or no credit, getting a secured card is one of the best ways to rebuild it. Secured cards require that money be placed as collateral before issuing an account number (usually between $100-$300). This gives lenders security against defaulting on payments by allowing them access to funds if needed.
The bad news is that these cards have high-interest rates, and you’ll need to make regular monthly payments like any other credit card. However, for them to work the way they should, your history needs time so expect it will take up at least nine months before seeing an improvement in your score.
2. Make on-time payments every month.
Your credit score is calculated based on the information in your credit report. If you want to improve bad credit, making all of your payments on time will help build a positive history with creditors and lenders that have access to those reports. Although it may seem easy, missing just one payment can mean being penalized by late fees and a drop in your credit score.
It is also important to try and keep your credit utilization low. This means using only a small percentage of the total available credit across all your accounts. For instance, if you have a $1000 limit on one card, don’t charge more than $100 at any given time.
3. Don’t apply for too many credit cards at once.
When trying to rebuild bad credit, it may be tempting to apply for a bunch of different credit cards to increase your available credit. However, this can do more harm than good. Every time you apply for a new card, the lender will pull your credit report, and this will cause a small ding on your score. Too many inquiries in a short period can also make you look desperate for credit, which is not what you want.
Stagger your applications and only apply for the cards that you need. For example, if you are looking for a new car loan, go ahead and apply for the loan from the dealership. But don’t go out and apply for three or four other loans that same week.
It can also be helpful to get a co-signer if you don’t think you’ll qualify on your own. Having someone with good credit sign up as an authorized user will help boost your score while they still make their payments (and vice versa).
4. Keep an eye on your credit report and dispute any errors you find.
Your credit score is based on the information in your credit report. This means it’s important to keep an eye on your reports and dispute any errors you find. Often, bad marks on your credit report can be due to simple mistakes like misspelled names or incorrect account balances.
If you do find an error, make sure to contact the credit bureau in charge of your file and have it corrected. It can take some time, but disputing incorrect information is one of the best ways to improve your credit score.
5. Consider working with a credit counseling service.
If you are having trouble managing your finances, a bad credit loan may not be enough to help you get back on track. In this case, working with a non-profit credit counseling service that offers financial literacy programs and debt management plans can be helpful.
By working with an experienced professional, you’ll learn how to reduce debt and manage your finances. This can be a great way to improve your credit score and get your finances back on track.
Conclusion
A bad credit loan can be a great way to rebuild bad credit, but it’s only part of the process. You’ll also need to develop healthy spending habits that will help you avoid problems in the future. Follow these five tips to help you rebuild your credit after bankruptcy.