Life Goes On: 5 Tips for Boosting Your Credit and Finding Financial Stability after Bankruptcy
Completing a bankruptcy is a major event that will help you start down the road toward a stronger financial future. It is not, however, the last thing you need to do when trying to build up your finances. After a bankruptcy, you will want to continue to work hard to improve your credit, build savings, and prepare for the future. With a little effort at this stage in your life, you will be able to avoid having to go through another bankruptcy in the future.
Keep Your Bankruptcy Paperwork
When your bankruptcy has been discharged you will be given quite a bit of paperwork. It is important that you keep that safe in a filing cabinet or other location in your home. In the event that any debt collectors attempt to contact you concerning discharged debt, you can provide them with your bankruptcy case number to prevent further calls. In the event that they continue to contact you, contact us [Link to CONTACT US page] to discuss potential legal action against them.
Build Some Savings
The best way to avoid financial difficulties in the future is to build up a safety net that you can use in the event of an unexpected expense. Most people can build a modest emergency fund by cutting expenses, working some over time, picking up extra work, or even selling unneeded items. Start with a goal of setting aside $1000 for an emergency, and then evaluate your needs from there.
Run Your Credit Reports
Once a few weeks have passed since your bankruptcy has been discharged, it is a good idea to pull your credit reports. This is free, and can provide you with very helpful information. If you discover inaccurate information, you can dispute the entry to get it removed from the report. This can help to boost your credit score right away, which is very important during the first months after a bankruptcy.
Other Ways to Build Your Credit
Building your credit is an important goal for the medium to long term after a bankruptcy. The following are some proven options for building credit in this situation:
- Pay Bills on Time – When calculating your credit score, payment history makes up approximately 35% of the calculation. Paying all your bills on time is critical for building your credit.
- Secure a Small Credit Card – Having a modest credit card that you pay off each month will not only add to your payment history, but will also help to establish a good debt to income ratio for most people.
- Take Care with Loans – It is important to avoid getting into too much debt, but if you need to take a loan, make sure it is only for the minimum amount you require. Of course, paying these loan payments on time is essential.
- Leave Accounts Open – If you have existing credit cards, loans, bank accounts, or other financial items that came through the bankruptcy, don’t close them right away. The age of credit accounts is an important factor for your credit score.
Review Your Will/Estate Plan
If you have a Will or an estate plan in place, you will want to make sure to review it to ensure it accurately reflects your new financial situation. Bankruptcy can have a major impact on your assets, and making sure this is reflected when planning for the future is important.