Declaring bankruptcy is both scary and freeing, but just declaring bankruptcy doesn't mean that all your credit problems are over. After your bankruptcy lawyer has helped you to successfully declare bankruptcy, you need to start repairing your credit. There are a few simple ways to do this:
Apply For Credit Cards
Working your way back up the credit ladder with credit card companies can seem like a real challenge. You have to get used to higher interest rates, lower limits, and perhaps a few rejection letters sprinkled in here and there. But there's no better way to start this process than with a secured credit card. Once you find a legitimate card that is not only reputable, but reports to the three major credit bureaus regularly, you can start putting money onto it and using it like a debit card.
Start with a limit you can really handle, maybe in the $500-$600 range. Since it's money you already put on the card, know your limits and don't feel the need to spend it all at once. Just as long as you make regular purchases over time, credit bureaus will see the debts being paid off on time monthly, which will begin to get you back on the right track. Some credit card companies will even show some extra leeway if you've never had a delinquent account with them, and you might be eligible for some promotional 0% introductory APR or limited rewards program which you can take advantage of while rebuilding your credit.
Repay Your Credit Card, In Full, Every Two Months
No one wants a high balance on their card, which results in insane amounts of interest that end up working against you over time. Interest collection is the bread and butter of the credit card industry, so be prepared to stay on top of this full-time now. The trick is make sure you are making regular, on time payments.
One of the easiest ways to benefit from this taking advantage of a 0% introductory APR card. These promotional offers, which usually last 12–16 months, allow you to make minimum payments without interest charges for one month before you pay off the rest in full without penalty to you. The key is to keep repeating this process, making regular charges and always keeping the balance low enough to ensure full repayment. Keeping a balance on your credit card every other month, and then paying it in full, shows credit agencies you are able to borrow money for an extended period of time, and pay it back when you are supposed to.
Budget Budget Budget
Sometimes the hardest thing to repair after a bankruptcy is your lifestyle, and nobody said getting used to your new budget was easy. But, in fact, it's easier than you might think. Understand why you got so deep into debt in the first place, cut back on expensive getaway vacations, eating out at fancy restaurants regularly, and excessive pleasure shopping. There's no need to take out everything completely, but even small changes such as replacing a cable TV subscription with a streaming online service can add up and save hundreds over a year's time. Sit down and map out your budget, and do the math. Do you really need new clothes every 3 months, or does your home really need all those cosmetic upgrades? By sticking to your budget, you're on the way to ensuring you'll never have to deal with debt again.
It takes a while to rebuild your credit, but if you work hard and pay special attention to your borrowing, spending, and re-payment habits you are on the road to having good credit once again.