Filing for bankruptcy gives you the opportunity to move forward with a clean financial slate. However, it may not be too long before you start thinking about getting a credit card, an auto loan or a mortgage. To do so, you need good credit and as you likely already know, filing for bankruptcy takes a major hit to your credit score. There are things you can do in the meantime to help rebuild your credit following bankruptcy.
Pay bills on time
One of the biggest things you can do to rebuild credit is pay your current bills on time and in full. Payment history makes up 35% of your FICO Score. These bills not only include any debt that was not discharged through bankruptcy but also expenses such as rent and utilities.
Monitor credit card use
After bankruptcy, you should reduce the amount of funds you place on a credit card, even if it is a secured credit card. This can keep spending down. It can also make it less likely that you will fall back into old debt habits. Credit card balances make up 30% of your FICO Score, so use credit cards wisely following bankruptcy and pay off any balances every month.
If you can stash some money away in a savings account regularly following bankruptcy, now is the time to do so. With an emergency savings in place, you can face unexpected expenses such as a broken-down car or a medical bill without incurring debt.
Finally, be patient. It can take months to years to rebuild your credit following bankruptcy. But by sticking to positive spending and debt habits, it can be done.