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Boosting your credit score post-bankruptcy

On Behalf of | Oct 25, 2022 | Bankruptcy

Bankruptcy often gets a bad rap because too much focus centers on what you lose. However, this unique solution allows you to start over and improve your financial habits.

One repercussion of filing for bankruptcy is its impact on your credit score. With the right approach, however, you can rebuild your score and reestablish credibility with lenders.

Credit cards

Credit cards can do a surprising number of good things to your financial reputation. The trick is your ability to leverage them the right way. Instead of applying for a traditional credit card, consider other options such as a secured credit card. This option requires you to deposit a specific amount of money which you can then borrow against.

Options like this tend to have higher interest rates. Especially if you have just undergone bankruptcy. However, if used consistently and responsibly, your effort should reflect on multiple credit bureaus which can boost your credit standing faster than other options. U.S. News warns that some credit card companies prey upon people who have just gone through bankruptcy. Use your best judgment when looking for a company to work with.

Co-signer

Another idea to consider is to ask for a co-signer. If you want or need to make a larger purchase, such as a vehicle, ask someone you trust to co-sign the loan. This way you can secure lending which you might otherwise not be able to do. Make the payments in full and on time. Gradually, your credit report will reflect the consistent effort you have made.

Some other options you can consider include keeping your credit balances low, starting and maintaining a savings account, and minimizing credit card use where you can. Despite the bankruptcy, you still have control over how you use your finances from here.