Bankruptcy offers a second chance to rebuild your credit and continue onward with your life. Unfortunately, your credit score will temporarily fall after declaring bankruptcy. During the period immediately after bankruptcy, individuals often find it challenging to do things like rent an apartment or purchase a car or home. There are, however, some pieces of advice that you can follow after declaring bankruptcy to immediately begin improving your credit score.
Avoid Repeating Your Mistakes
If you declare bankruptcy, it is important to consider what caused you to end up in this situation in the first place. While some people declare bankruptcy due to a one-time uncontrollable situation like a medical emergency, other people end up bankrupt due to poor spending decisions. After deciding on the reasons that led to bankruptcy, you should create a budget, which will help you keep track of what you spend so that unnecessary spending can be avoided. It is important to create a budget that is reasonable and which you will be able to meet.
Obtain a Secured Credit Score
A poor credit history can cause lenders to view you as someone who is likely to be a bad borrower. One of the most common ways around this situation is to obtain and use a secured credit card. While it might seem like taking out more credit is an unlikely way to improve your credit score, using a secured credit card is actually one of the most effective ways to rebuild your credit score. Secured credit cards require a person to pay a deposit to use the card. The amount of the deposit that a person pays influences the amount of money that can be placed on the card. If you decide to use a secured credit card, it is important to pay off the amount on the card each month.
Use a Cosigner
Another complication that frequently arises after bankruptcy is that it often becomes difficult to find a lender. If you encounter difficulty in finding a lender after declaring bankruptcy, it is often a wise idea to obtain the assistance of a cosigner, which is someone who agrees to pay a loan if you are unable to do so. If you do find a cosigner, it is critical to keep up to date with your payments because failing to do so will damage your credit score. To decrease the amount that you are required to pay, you should also take steps to limit your spending and keep balances as low as possible.
Speak with a Knowledgeable Bankruptcy Lawyer
While the bankruptcy process is complicated, there are fortunately some strategies that you can follow to make the process easier. At Adams Law Group, our bankruptcy lawyers understand the bankruptcy process and are prepared to answer any questions that you might have about the process. Contact our law office today to schedule an initial consultation during which time we will begin to help you create a strong plan to make sure that you navigate the bankruptcy process successfully and have the opportunity to rebuild your credit rating.