Improve Your Credit Fast After Bankruptcy
Bankruptcy is by no means game over for your financial life — there are steps you can take to begin rebuilding your credit and eventually, your overall financial health.
The road back to financial well being starts with rebuilding your credit score. “One of the first things to do is to get a free copy of your credit report, which you are able to do once a year from each of the three major credit reporting agencies — check this for errors and make sure you also determine your FICO credit score and work diligently to build up this score each month.”
Bankruptcy can impact your credit for as long as 10 years, but the more active a role you take and the sooner you get started, the quicker you can bounce back from bankruptcy.
Know Your Credit Score — Many people put this one off, because it can be painful. You know your credit score is low so does it really matter how low? Yes, it does. Get a copy of your credit report and know your score. Review it for any inaccuracies and make note of your debts. Only then can you come up with a plan to pay off your debts and improve your credit. WisePiggy.com is a great resource to get your score truly for free (without having to enter your credit card number).
Open a new Bank Account — Opening a new checking and savings account will demonstrate financial stability. It can also give you a fresh slate to practice good financial habits. When you open your account, talk to the banker about signing up for automatic online bill pay. This will ensure that your bills are paid on time, which is a major factor in good credit.
Apply for a Secured Credit Card — If big credit card bills led to your bankruptcy, you may feel like this is a terrible idea. Why go down that path again? The best answer is that secured credit cards are one of the easiest ways to build credit and improve credit scores. Compare interest rates of different cards, so you can select a card with the best rate and a low annual fee. A rate around 15% is good and an annual fee less than $30 is desirable.
Get a gas Card or a Retail Card — Gas and retail credit cards will also improve your credit. If you drive a car, you will have to purchase gas. You should make those purchases work for you. Gas and retail cards typically don’t require applicants to have good credit and, in fact, cater to folks with blemished credit.
Pay off Your Balance in Full Every Month — While you are reestablishing your credit, it’s critical to pay off your full balance every month. This demonstrates to creditors that you are not a risk. Timely payments also have a significant impact on your credit score.
Continue to Monitor Your Credit Score — Check your credit score regularly (monthly is ideal) while you are actively improving your credit. Watching that number go up can make you feel like your hard work is really paying off.
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