It does great damage to your credit score when you file for bankruptcy, as most who have done so are aware.It is possible to get a credit score of 700 or even 750 if you establish proper financial habits and take on credit cautiously.You will get better rates if you have a good credit history.
Step 1: Financial habits can be maintained over time.
Consistency is the key to rebuilding credit.Paying bills on time and meeting credit obligations is what this means.delinquencies remain on your credit report for seven years before they disappear.A missed payment of one month is referred to as a delinquencies, but they aren't reported to credit bureaus until two months are missed.You need to keep good credit paying behavior for at least seven years in order to have a clear report.
Step 2: Your credit report should be reviewed.
Knowing where you stand with regards to credit and how far you need to go to get to the credit score you want is the beginning of the journey to rebuilding credit.Anything over 700 is considered good.Anything under 640 is considered poor with 400 or lower being very poor.Knowing this will let you know how much your finances need to be restructured.You can get copies of your credit report from all three major bureaus.You can request reports from the bureaus of your choice via one source if you contact the three nationwide credit reporting companies individually.The Annual Credit Report Request Service can provide free annual credit reports.There are fraudulent websites.To request through the mail, you need to complete the Annual Credit Report Request Form and mail it.When you can get another round of free credit reports next year, mark the date on your calendar.You should consider that appointment to check your progress.There are websites that give you a free credit score.
Step 3: You can dispute any incorrect information on your credit report.
It is not uncommon for incorrect information to appear on your credit report.If debts are paid in full, they could be listed as not being paid at all.If you want to dispute incorrect information on your credit report, you can use this sample form and mail it to the company.There is an error in the report and you should include copies of any documents that prove it.Make it clear where the error is on the report and that you want to have it corrected.Send your letter via certified mail and make sure you request a return receipt, which will give you documented proof that the bureau received it.
Step 4: A budget can be created.
It can affect your credit score for up to 10 years.Proper budgeting skills are the first step in building strong financial habits that will not only help you rebuild credit, but also assist you in maintaining good credit going forward and prevent financial hardship.You can make a strict plan for what goes out with budgeting.It leaves room for debt repayment, savings, and on-time bill payments.The golden rule of budgeting is to never spend more than you make.Spending needs to be reduced or income increased if you are.Determine how much you bring in each month.Determine how much you spend each month.Housing/shelter, food, utilities, communications, transportation, medical expenses, and all loan repayments will be included.It will include discretionary items like vacations and nights out.Look at your bank statements to figure this out.To find out how much extra cash you have every month, subtract your expenses from your income.5 to 10 percent of your income should be left over for savings.
Step 5: Cut non-essential expenses and create savings in your budget.
It is important to reduce non-essential expenses as much as possible once you know how much you make.There will be more room for on-time bill payments, free up cash for repaying loans in a timely manner, and allow for savings every month.To reduce needs as much as possible is the key to being aware of what you want.Make sure to look at your needs as well.If you need a cell phone but don't want a 3GB data plan, a 1GB plan is all you will need.There is a list of needs for most people.It's likely that you have to pay rent or a mortgage every month.If you can't afford it, look for more affordable housing.Food.You should estimate how much money you spend on food every month.Eating at home and packing a lunch more often will help you cut down on that number.There are utilities.You can reduce water, trash, electricity, and natural gas bills by being conservative.Take shorter showers, turn off electronics that are not in use, dress warmly, and so on.Communications.You need access to a phone whether it's a land line or a cell phone.If your mobile bill is eating a lot of money every week, it's time to see if you can reduce your minutes or data plan.Most people wouldn't consider cable or internet access necessary to live.You can use the internet at your local library or coffee shop if you can't afford it at home.There is transportation.You probably have to spend money to get around, whether it's a car, a bike, or a bus pass.Determine the monthly costs for gas, insurance, maintenance, and registration if you have a car.Medical expenses.If you have a chronic condition that requires regular doctor visits, you should be aware of the costs.How much insurance costs you each month could be included.If your medical costs exceed a certain threshold, you may be able to deduct them on your tax return.
Step 6: Pay your bills on time.
You will have a clear idea of what your expenses are once your budget is created.It is important to pay your bills on time.35 percent of your credit score is made up of payment history, and on-time repayments can quickly and easily rebuild it.It is important to stop late paying bills and late fees.If you want to check your calendar religiously, draw up a calendar with all of your due dates.Try to mail payments or do online transfers a day or two before the deadline to make sure the money is ready.Getting into the habit of paying your bills on time can help you break some of the bad financial habits that contributed to your bankruptcy.It will be best for your bank account if you accept that it might be difficult.
Step 7: There is a small cushion in savings.
It's important to put a small amount of money into savings every month.Saving anything is positive despite the recommendation of 5 to 10 percent.If there is a sudden bill, you can't use credit.Start small.Most financial experts recommend having enough money in savings to cover six months of expenses, but that is an ambitious starting goal.
Step 8: There is a new checking and savings account to open.
If you don't already have a checking or savings account, open one at a local bank or credit union.If you are unemployed, you should compare the interest rates and fees of all financial institutions between your place of employment and your home.Consider the services each bank provides and how likely you are to need or want them.A bank with many different services may not be the best choice for you.Discuss banking with friends and family.If they are happy with the interest rate, minimum deposit requirements, fees, and service they receive, you can ask them to use the same institution.
Step 9: There is a secured credit card.
A credit card allows you to borrow money and pay it back over a period of time.This is the easiest way to rebuild credit.The bank will give you credit in the amount of $500 if you give it a secured credit card.Some credit card companies like Discover offer secured credit cards.Start at around $500.Ask the bank if you can gradually raise the limit as your credit improves.Some places try to charge up to $200 for a start-up fee, and if you call a 1-900 number, you will be charged money.Since they can't seek court protection again for seven years, some lenders seek out recently filed bankruptcies.Don't open more than one account.Do you know if your transactions will be reported to the credit bureaus?You want them to know that you're paying off your debts so you can improve your score.You might have to wait a year for a secured card after you file for bankruptcy.If that is the case, focus on building up your savings.You can get a secured card at the bank.You will eventually want to ask if you can switch to an untainted card with the same bank, so choose wisely.
Step 10: Purchase gas or retail with a credit card.
When you have a secured card, you can apply for a retail or gas credit card.One aspect of your credit score is "types of credit in use."You improve your credit score by using different types of credit.Make sure your transactions are reported to the credit bureaus.The point of this is for them to see that you are responsible with your money.Don't pay huge start-up fees.You don't want to go on a shopping spree if you get a card at the store.You won't be tempted to spend a lot of money on gas cards because gas is a necessary expense.Don't go to department stores that have items that are out of your price range.Along with retail and gas cards, you can add other types of credit to improve your credit rating.A line of credit, a car loan, or a mortgage are some of the other credit types.If you don't already have a car loan, mortgage, or line of credit, it is wise to wait at least two years after your bankruptcy to consider them.
Step 11: You have to pay off your balance every month.
Carrying a balance is good for your credit score, but it's not always true.If you have bad credit, the credit bureaus want to see that you can pay off the balance quickly.35 percent of your credit score is payment history, so paying bills on-time and in-full will build you credit.
Step 12: It's a good idea to avoid closing accounts.
35 percent of your credit score is payment history.Amounts are owed another 30 percent.The amount of credit you have available is used to calculate this.Your credit score is lowered when your total credit limit decreases.If you don't want to spend on a particular account, destroy your card.
Step 13: Don't work with finance companies.
Finance companies exist to make money.Instead of being swayed by debt consolidation offers, focus on maintaining your budget, putting money into savings, and slowly building up the limit on your secured card.
Step 14: When will you be able to upgrade to an Unsecured card?
If you've managed a secured card for more than a year, it's time to ask your bank if you can switch to an unrestricted card.After 12 to 24 months, most banks will allow you to have a low-limit card.You have the same mentality you had with the secured card.If you don't spend money on the card, you'll be less likely to file for bankruptcy again.