Gone bankrupt… now what?
Filing for bankruptcy damages your credit, but you can recover. While a bankruptcy will legally stay on your credit report for 10 years, there are three things you can do to start improving your credit score right away.
1. Build credit. Debts may have gotten you here in the first place, but in order to qualify for a loan in the future, you need to start rebuilding your credit. A secured credit card is the place most people start—the credit card company will set your limit at an amount equal to what you have on hand at the bank. But don’t get carried away—applying for too much credit at a time (for example, taking all those credit card offers at the airport) will hurt your score.
2. Be responsible with your credit. When you get that secured credit card, don’t spend to the limit. Light, consistent use is the best policy—aim to spend about 30% of your available credit every month, and pay your bills on time. The first month you pay your bill is the first month your credit report starts showing that you’re getting back on top of your finances.
3. Clean up your report. Closing some of your debts was part of the reason you filed for bankruptcy in the first place. Get a copy of your credit report to make sure if it accurately reflects the terms of your case; there may be some misreported overdue balances or closed accounts that still look open. Contact the credit bureaus in writing to fix any errors on the report — making sure you bounce back as quickly as possible.
Remember—you’re entitled to a free credit report from each of the three federally certified credit bureaus each year. AnnualCreditReport.com is the only site authorized by the FTC to direct you to the three certified bureaus.
Have questions? Leave me a comment!
