Your credit score is the number that financial institutions will use to determine how trustworthy you are as a borrower. Someone with a high credit rating may receive lower interest rates or larger lines of credit. Someone with a low credit rating may be denied for the same lines of credit, mortgage loans, car loans and things of this nature.
That’s why people are sometimes concerned about filing for bankruptcy, as it will reduce their credit score. But the key thing to remember is that the score can be built back up again, which is often the focus after a bankruptcy case. Here are a couple of ways to do it.
Make all payments on time
First off, it’s very important not to miss payments after the bankruptcy has been filed. Remember that those missed payments were already decreasing your credit score before filing for bankruptcy. This is part of the reason why bankruptcy can help, even though there’s an initial drop in your credit score when you file. It’s just important not to fall behind again, stopping the damage from missed payments and building the score back up.
Use a secured credit card
You can also take active steps to repair your credit score, such as getting a secured credit card. This is a card that you obtain by giving a down payment to the lender. Because of the down payment, there’s no risk for that lender, but you can still rebuild your credit score by using the line of credit and paying it off monthly.
One of the most important things to remember about bankruptcy is that it does not ruin your financial future forever. These are just a few ways that you can rebuild your credit score and get a fresh start. This is why it’s important to understand exactly what steps to take at this crucial time.
