3 Ways to Rebuild Your Credit after Bankruptcy

3 Ways to Rebuild Your Credit after Bankruptcy

3-ways-to-rebuild-your-credit-after-bankruptcy

Bankruptcy is reflected on the credit report of yours for ten years. However, with time, its impact will gradually diminish. By taking certain positive actions, you can offset the bad effect bankruptcy has on your credit report.

Start again with basics

What lenders would want to see here is that you’ve enough funds to pay off your current loans. If you have a little left with you after you’ve paid your loans, it will be so much better. Because of lighter debt, lenders would be more inclined to give you a loan.

Additionally, lenders, like banks, credit card companies, and legal money lenders Singapore, know that you cannot file bankruptcy to escape paying off new debt. You will become eligible for another discharge only eight years later.  

The first thing you must do is create a budget. This will help you manage your finance better. The credit counseling you received before your bankruptcy was processed would have you told you what you need to do for creating a budget. However, in case you have some doubts, you shouldn’t hesitate to approach a reputable credit counseling firm.

The next step is to create a suitable emergency fund. According to research, even having a small amount of savings, like $500, can help you deal with an unplanned expense without falling back on payday loan or a credit card loan or a short-term loan from a money lender or loan shark.

Plan your credit strategy

Many people after they’ve received a discharge believe they cannot get a loan again. This is not so. Of course, you’ll have to give sufficient proof of your being an eligible or attractive borrower, but it is not impossible to do so.

Your goal is the same as someone’s who is starting from the beginning, that is, to build an attractive credit score. However, your situation is reasonably different. In the case of someone with no or little credit history, creditors don’t know anything or much about him or her. However, in your case, the issue is diametrically opposite: creditors know too much about you.

Start by assessing your current situation. For this, peruse your annual credit report which you can get for free. Check if all entries in it are correct or not. Incorrect information can negatively affect your credit report and make it all the more difficult for you to become debt free. In case you notice an error in your credit report, raise a dispute as soon as possible.

The second thing you must do is learn your credit score. You can get a copy of your credit score for free. The smart thing to do is check your credit score every month.

Opt for a loan that is suitable for you

You can make yourself an attractive borrower by providing lenders assurance that they won’t lose their money if they approve a loan to you. The right way to do is by opting for a loan suitable for you, like a secured loan from a licensed moneylender, secured credit card, or co-signed loan.

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