How to Rebuild Credit After Bankruptcy
Here are some steps you can take to start rebuilding your credit after you’ve been bankrupt:
Pay all of your bills on time. Don’t underestimate how important it is to pay your regular bills, like hydro, gas, cable, internet, etc. on time every month.
Apply for a cell phone on contract. The big companies will report your payment habits to the credit bureaus each month. Again, pay your bill in full and on time every month.
Apply for a secured credit card. You will need to save up at least $500 for the security deposit so that the credit card company can hold that money for up to 2 years. They will do this in case you don’t make your payments. Use your card for one or two small, planned purchases each month, wait for the bill to arrive and then pay it in full and on time.
Don’t apply for too much new credit. Every time you do, there will be a “hit” against your credit report. If you are declined once or twice, wait a minimum of 6 months before you apply again. The longer you wait, the better.
Have a budget that lets you live within your means. You will need to set some savings aside for unexpected expenses. Make regular deposits to your savings account and manage your regular monthly expenses carefully.
Use your bank account responsibly and consistently. Overdrawing your account or writing NSF cheques is a sign of financial difficulty.
Avoid using payday loans to make ends meet.
Part of rebuilding your credit after bankruptcy means learning new money habits. This can take time. If you notice that you are starting to get behind again, don’t wait until you’re maxed out before you get help.
If you’re thinking of declaring bankruptcy and aren’t sure if it’s the right option for you, please contact us for more help. We’ll be happy to answer your questions and provide you with information about how it can affect your credit.