Bankruptcy is one of those situations no one wants to find themselves in. It can be devastating in a wide range of ways. If you are declared bankrupt, there will be a lot of legal issues that you must resolve. This is because it will negatively impact your credit score and record.
Most lenders won’t be open to issuing you a loan if you are declared bankrupt. You will need to work on your situation and rebuild your credit to be eligible again. If you are looking for a way to improve your credit record and score, then this post will be worth reading.
Below are things you must keep in mind when rebuilding your credit.
What You Should Know About Bankruptcy
The first thing to know is that bankruptcy is a legal process. It is there to protect people or entities that are unable to repay their debts as agreed by lenders. Filing for bankruptcy can provide much-needed relief as you come up with a way to clear off your debts.
However, a bankruptcy record can hang over someone’s head for up to 10 years. It can affect their ability to access credit for as long as it shows on their record. This is why it is vital to find ways to fix your credit record after filing for bankruptcy and access credit in the future.
Knowing the ways to rebuild your credit can help in this journey. However, you should also work with bankruptcy lawyers. They help to manage the credit score report by educating about the impact of bankruptcy on the credit score, reviewing credit reports for accuracy, negotiating with creditors, advising on credit usage, and monitoring credit reports over time. They assist in getting your credit score back. It will be easy to do it in a short time if you have an expert by your side.
Steps to Rebuild Your Credit Record After Bankruptcy
You may wonder how long it will take to build credit after bankruptcy. Well, it all depends on the strategy you deploy. You can use the insights shared below to come up with a strategy that suits your situation.
Here is what you need to do:
- Check Your Credit Report
You can’t know what your situation is unless you check your credit report. There are many credit bureaus that your bankruptcy may be reported to. If you are also wondering who reports bankruptcies to the credit bureaus, it is the lenders you owe who do it.
The best thing to do is request a report from a credit bureau. You can get a report in under 24 hours and know more about your situation. For instance, you will get to know who reported you. Also, you can use the report to easily come up with a recovery strategy.
- Keep An Eye On Your Credit
This is another step that you must follow to rebuild your credit. It is vital to know if the steps you are taking to rebuild are bearing fruit. You can do this effortlessly by getting a credit report monthly. You can monitor your score for a year or more and keep working on it.
Monitoring your score will ensure that your credit situation is accurately reported. Sometimes the actual figures on your record might be misrepresented. This might lock you out of credit opportunities. However, you can note it quickly if you monitor your credit record.
- Learn Responsible Habits And Practice Them
Your financial habits can help increase or lower your credit scores. It is vital to learn the healthy habits of borrowing and practice them always. For instance, repaying your credit on time is one of the best habits to learn. It will help ensure you always keep a positive record.
Also, you need to regulate how you use your credit card. Ensure that you swipe it only when it is absolutely necessary. The best way to avoid using your credit card unnecessarily is by having an emergency savings account. You can use it to sort out unplanned expenses.
- Consider Secured Credit Cards
Ditching traditional credit cards for secured ones can also be a good idea. A secured credit card allows you to make a deposit before you take credit. Borrowing against the security deposit will ensure lenders’ thrust in you, and your credit will improve if you repay on time.
However, ensure you strategically use your cards, even if they are secured. It will also be a good idea to consider a credit card company with the best terms. Some lenders will graduate you automatically to the traditional card if you show consistency in repayments.
- Find a Co-Signer
There is no need to worry about your credit record if you can find a co-signer. This is a person who acts as a guarantor for your credit card. This means that they agree to repay your credit card should you default. Most lenders will lend to you if you have a co-signer.
But then, the co-signer has to be someone well-known to you. Also, they need to have a good credit record of acting as guarantors. The best way to find one is by checking with your family or friend circle for a financially stable person who trusts you.
- Be An Authorized User
Sometimes finding a co-signer can prove to be a daunting task. However, this doesn’t mean that you have run out of options. You can consider applying to become an authorized user on someone’s card. This means legally attaching your card to another borrower’s credit card.
Lenders won’t see your credit report if you are an authorized user. Instead, they will check the other person’s record to see how qualified you are for credit. Your score can improve over time if the payments keep coming in on time, as agreed with the creditor.
Conclusion
Being unable to access credit because of a poor record and score can hurt. However, the good news is that this is a situation you can correct. All you need to know is how to fix credit after bankruptcy. The insights we have shared above with you can be helpful on this journey.
You must have learned how important bankruptcy lawyers can be in such a process. It can be tricky to rebuild your credit score after bankruptcy if you don’t know how the process works. An attorney will make it easy to go about this by taking you through the above steps.
