How to Rebuild Credit After Bankruptcy?

As a result of bankruptcy, your credit score can take a big hit. The negative mark stays on your report for ten years and is difficult to erase with only hard work. It’s easy to spend responsibly to rebuild the positive marks necessary for improving one's credit rating.

Here are some tips for rebuilding credit after liquidation that may help:

1. Keep up payments with non-bankruptcy accounts:

If you're having trouble paying your bills and are considering bankruptcy, there's a chance that some of your bills may not be included in the filing. That means you'll still need to pay them, or risk being sued for non-payment. If unavoidable, it's best to keep up payments with non-bankruptcy accounts on time so creditors don't get suspicious. It's also important to avoid incurring new debt as this will just complicate matters even more later on when you decide not to file for bankruptcy. Instead, choose another solution such as a consumer proposal or restructuring your debts with the help of a credit counselor.

2. Avoid job hopping:

It's a tempting idea to get a new job every time you're bored, but in the end, it will just hurt your credit. Should you be lucky enough to find another job that pays better or is more enjoyable than your current position, then you can switch but don't do so because you are not pleased with where you are currently employed. The best way to avoid this unfortunate situation is by being loyal and committed to your employer for at least two years before looking elsewhere.

3. Apply for new credit:

Are you in need of new credit? No problem, there are many ways to get a credit card. You can apply for one online or go to your local bank and fill out an application. The best way, however, is by getting a secured credit card because it will help build your track record with creditors. Secured cards are backed by money that you put down as collateral so the chances of them being approved are higher than unsecured cards which don't require any type of security deposit upfront. If you have good enough credit then this is something worth looking into.

4. Consider a cosigner or becoming an authorized user:

If you're looking for a new credit card, there are two ways to go about it. You can either apply for the card yourself or add an authorized user to your account. As an authorized user, you will be able to use your parents’ credit limit on their account and have access to any rewards they may earn. However, if you want more control over how much of the available credit is used, then applying with one of your accounts might be best.

5. Be smart about applying for new credit:

Do you have a credit card? If so, did you know that when you apply for new credit and sign up for new accounts, it can negatively impact your current credit score? When applying for any kind of loan or line of credit, the lender will look at your total debt-to-credit ratio to determine how much additional money they're willing to lend to you. This ratio is based on how much outstanding debt you currently owe with the amount of available credit that's issued by all lenders combined. In other words, if you are borrowing more than 40% of your total available limit from one provider, then this could hurt your ability to borrow elsewhere.

6. Keep up payments with new credit cards:

You will need to keep up with payments on your new credit card, but it is not as difficult as you might think. You can set up auto pay and online bill pay so that the monthly payment is automatically deducted from your bank account. This prevents missed or late payments which can affect your credit score. Every family has its own financial needs, so there are many options for credit cards out there, including cashback reward cards and low-interest rates for those who qualify. Just make sure you find a card that suits your needs best.

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