One of the main things that people ask when considering bankruptcy, understandably, is how they can rebuild their credit after they file. In fact, many people are under the impression that filing for bankruptcy means you ruin your credit forever and that you’ll never get a loan again.
First things first: That’s not how bankruptcy works. It does not mean your credit is ruined forever. It does not mean you can never get another loan. You can. It may just take work to get your credit score back up to where you want it again. To do it, there are two keys: Secured cards and on-time payments.
Getting a credit card can be difficult after bankruptcy, but secured cards fix that. You just give the lender a downpayment for the value of the card — say $1,000. You can then borrow up to that limit and they know there’s no risk to them.
After borrowing, treat it like a normal card. Pay off what you owe. Keep the balance low. Show that you can and will be responsible with your card. That may even pave the way for a non-secured card in the future.
On-time payments are as simple as they sound. You never want to be late with a payment again. That goes for your secured credit card payments, utilities, rent payments and everything else. Budgets so that you know you’ll have the money every month and then get those payments in on time. Again, you’re proving to the lenders that you can do it.
This can be a slow process. But it does work in the end. Make sure you keep that in mind when thinking about bankruptcy and all of the options you have.