If you are declaring bankruptcy, you probably have a lot of concerns about your credit score. You may fear that you will never have good credit again. Filing for bankruptcy does affect your credit, but the damage is not irreparable.
Bankruptcy does not completely decimate your finances forever. In fact, it is a great way to recover and have better credit than ever before. Here is a guide to restoring your credit after bankruptcy.
1. Get a secured credit card or loan
It will be difficult to obtain traditional credit because lenders will see you as a risky borrower. Thankfully, there are secured credit cards. When you open a secured credit card, you will need to put a deposit down to begin the credit line. Most of the time, the credit line will be the same amount of the deposit, but some creditors may give you an extra bonus.
2. Obtain a secured loan
You can go to your community bank or credit union to get a loan. These institutions may give you a loan that lets you borrow against money you deposit with them. They may also be able to get a loan without offering any cash up front, but you will only get the money once you make the necessary payments. The lender should send reports about your payments to the credit bureaus to help your score.
3. Use a card from a store
When you purchase something from a retail store, you may be annoyed by the sales associate who asks you if you want to sign up for the store credit card. However, this may be a viable method for rebuilding your credit. These cards are easy to qualify for and may give your credit score the extra boost it needs.
Whether you use one or multiple methods to rebuild your credit, you should always monitor your credit score to ensure everything is going according to plan.