Your credit score is important because it helps you access loans and lines of credit. If you apply for a credit card or a home mortgage, for instance, the lender is going to look at your credit score to determine whether or not you are a risk and if they’re going to give you that loan.
Declaring bankruptcy causes a temporary decline in your credit score. This is one of the main drawbacks to using bankruptcy, but you need to know that it’s very possible to rebuild your score afterward. This can make bankruptcy a more attractive option if you know what to do.
3 tips for a good score
Exactly what you need to do is going to depend on your own financial position and the reasons you declared bankruptcy, but here are a few general tips that can help you build your score back up again:
- Do not be late on future payments. Always focus on getting them in on time, even when they’re small. If you need to, see if the payments have an automatic option so that you can just turn it on and know that it will always be made on time.
- Use a secured credit card. You can get this card with a down payment, so it’s obtainable even when you have a low credit score. After you’ve used it, you may qualify for a card without a down payment.
- Work with co-signers. Getting loans and making payments on time helps to increase your credit score, but it can be difficult to do if you just declared bankruptcy. One way around this is to get a cosigner who knows they can trust you.
These are just three tips, but your main takeaway here should be that you can absolutely repair your credit score after bankruptcy. Simply eliminating your debt is going to help you. Carefully consider the steps you need to take to get back on stable financial ground.