How To Rebuild Your Credit Score After Bankruptcy
Once you have received your Chapter 7 or Chapter 13 bankruptcy discharge, it is important to strategically rebuild credit scores — and yes, you can improve your credit score post bankruptcy. Our experts at ZocLaw.com highlight the different ways in which you can increase your credit score without getting yourself in large amounts of debt.
Rebuilding Credit Scores – Get a secured credit card
Many individuals with low credit scores are denied credit cards. If you are faced with such a situation, think about what you would use a credit card for. If it is to make a hotel reservation or to rent a car, a secured credit card may be the way to go. This is how a secured credit card works: You will be required to deposit money into a savings account in a bank or credit union. The account will be frozen while you have the card, and your credit limit will be a percentage of the amount you deposited. The financial institution will determine the amount that you will have to deposit into the account. If you are unable to honor your obligations on the secured credit card, the bank or credit union will use the money in your account to cover the charges. If you do decide to apply for a secured credit card, it is recommended to make small purchases that you can pay off each month. Paying on time will help rebuild your credit score.
Rebuilding Credit Scores – Get an unsecured credit card
In many cases, it is easier to obtain an unsecured credit card from a department store. Start with one company, pay your bills on time and eventually other companies will issue you cards. Because the interest rates are higher, it is advisable not to let balances carry over from one month to the next.
Rebuilding Credit Scores -Work with local merchants
A very effective way of building up your credit score is by approaching a local merchant and make arrangements to purchase an item on credit. Many local stores may be willing to set up a payment schedule. However, you will be required to make a deposit. It is important to ensure that the merchant report payments to a credit reporting agency; if not, this strategy will not be effective.
Rebuilding your credit score is essential particularly if you would like to own a home or a vehicle. Contrary to popular belief, it is very possible to increase your credit score after you have filed bankruptcy.