A lot of people worry about how their bankruptcy will affect their credit score. While bankruptcy can damage your credit, most people who reach that point already have damaged credit. It’s better to focus on rebuilding your credit after bankruptcy is over.
Rebuilding your credit score should be on top of your mind if you have declared bankruptcy. It is part of the whole process of getting back on your feet and putting your finances in order. Below are some tips that could prove useful:
Ensure your credit report and score are correct
Your credit rating could be lower than it should be due to inaccurate information. It is why you first need to verify the numbers as soon as the dust settles. That way, you can have a point to start with and measure your progress along the way.
Be prudent with your finances
Make a budget and stick to it. Do not live beyond your means since that may mean getting into more debt. Instead, plan around with the little you have with your eyes on the bigger prize.
Look for a credit product designed for you
Financial institutions are not very keen on lending you money when you have a low credit score. However, there are custom-designed loan facilities that could help improve your profile. For example, you could have a secured credit card whose credit limit is the money you have in the bank. Such credit facilities offer short-term measures of improving your credit rating if you do not default.
Financial discipline is key
Rebuilding your credit score is not an overnight process. It may take a year or two of financial discipline and consistency to get back to where you were initially, but in the end, the reward is worth every effort.