There is no doubt that filing bankruptcy is going to affect your credit rating. Although filing bankruptcy can have a negative impact on your credit at first, most people find that their credit profile still looks better than if they hadn’t addressed the problem at all. Bankruptcy isn’t always a sign of failure. Sometimes it’s a sign that your life changed unexpectedly and you took the best route allowing you to continue to care for yourself and your family. As such, after bankruptcy, you have a fresh slate and a chance to start over. Take advantage of this second chance and make sure you maintain a good credit rating.
Make Payments on Time
If you still have accounts open, make sure that all of your payments are timely. When it comes to things like utilities, they aren’t going to note when you make your payments on time, but they may report when you are chronically late or default on your bills. Because timely payments make up the largest part of your credit score, it’s important that you are diligent in making all payments on time every month. You might even set up a budget plan. If they don’t have one, make one of your own and set notifications and reminders to make your payments at least a couple of days before the actual due date. Most creditors will allow you to set up automatic payments to help ensure you don’t forget and make your payments on time.
Open a Credit Account
You don’t need to have a large credit account or a multitude of credit cards. Instead, open one account, like a gas station or grocery credit card account, that you can use on a regular basis. Right after your bankruptcy, you may be limited to using a secured credit card to rebuild your credit rating, which will likely carry a high APR. Use the card account for small purchases and make sure you pay the balance in full each month in order to avoid paying interest on your purchases. Gradually, this account will contribute to a positive credit rating.
In many cases, you won’t have a choice but to start out slow. However, once you find that your credit is improving, select the best offers and make sure you can handle the payments on all accounts before adding more. When rebuilding your credit and maintaining a positive credit rating, how you manage your accounts is more important than how many you have.
It helps to make a whole new budget and take a class or two to learn how to keep your credit clean after bankruptcy. You want to try to put a positive spin on your bankruptcy by demonstrating that you have learned from it. In this way, your credit score will rise steadily and, over time, your creditors will be able to see that you are making wise financial choices.
Share in the comments below if you have tips for maintaining a good credit rating after bankruptcy.