06 Nov 2020, Author:

When people hear the word bankruptcy, they often think that it’s the end of the road for them. But if you have researched about it, you might have realized that it can also be the start of a long positive journey. After you have discharged your debts in court, you have a unique opportunity to rebuild your credit without suffering the burden of finances weighing you down. Only if you know which path to take and what decisions to make, you can get your life back on the right track. 

However, it isn’t all sunshine and rainbows as filing for bankruptcy comes with a set of difficulties that you must face head-on. The first and most vital thing you have to deal with is the credit score sting due to bankruptcy. Meanwhile, the best way to fuel your investments is to go for guarantor loans as such loans don’t take your credit score into account, but if you follow through with the following tips and tricks, you can also improve your credit score. 


Monitor Your Credit Closely

After bankruptcy, monitoring your credit closely is very vital. You need to make sure that you track the progress you are making, which can only be done by comparing your current credit reports to your past. You need to realize that just because something is on your credit report doesn’t necessarily mean that it is a fact. Credit reports aren’t perfect, and sometimes you can identify a lot of errors on them if you look at the report closely. 

So, after you have successfully filed for bankruptcy, you need to make sure that all the accounts that were discharged are actually reported as discharged, the discharged accounts have a zero balance, and the bankruptcy filing date is correct as it can last for up to 10 years on your credit report. 


Consider Secured or Retail Credit Cards

Where bankruptcy can limit your purchasing power, it doesn’t mean that you can’t get a new credit card or fulfill your needs. You may still qualify for certain credit cards if you are dealing with bankruptcy. The best way to build your credit after bankruptcy is to apply for a secured credit card. When you are applying for a secured credit card, you have to deposit some amount beforehand, which is the amount that becomes your credit limit. 

On the other hand, retail credit cards have looser credit requirements compared with secured credit cards. However, you will have to deal with higher interest rates and penalty fees. The main goal of applying for these types of credit cards is to improve your score by having a fixed amount of credit that you can take out, make payments on time, and keep your balance figured out. 


Consider a Cosigner or an Authorized User 

One of the most efficient and effective ways to get loans after declaring bankruptcy is to find a cosigner. A consigner is an individual who applies for a loan with another individual. There is a contract between these two individuals, which states that if the original borrower isn’t able to make the payment, the consigner will pay off the debt. 

Moreover, you can also become an authorized user for someone else’s credit card. It can be any individual in your family or friends who you trust and who trusts you. When you are added to someone’s credit card as an authorized user, the payments anyone makes on that credit card will show up on your credit report. You can easily improve your report by getting yourself authorized to someone’s card with a good credit history. 


Don’t Repeat Past Mistakes 

Now that you have made sure that you are back on the right track, you need to be very careful. You might think that filing for bankruptcy has given you a clean slate, but that isn’t exactly true. You need to make a detailed analysis of your spending habits and figure out what landed you in a position where you had to file for bankruptcy. After making sure that you have highlighted all your past mistakes, you need to determine where you can cut back or exercise more self-control. Every little thing that you do right now is going to have a significant effect on the future. If you are having trouble getting loans, you can go for no guarantor loans as they are straightforward to get and will get you back on your feet. 


Have Your Payments Reported To the Credit Bureaus

Payment history is one of the most critical factors that has a considerable impact on your credit score. You have to keep it in mind that when you get a loan from creditors or lenders, they don’t have a duty to report your activities to the credit bureaus. If you are taking loans or need to raise funds for quick cash, paying them back promptly will have a very positive effect on your credit report. So, you need to make sure that you report your positive activities to the credit bureau.


Final Thoughts 

Life after bankruptcy might seem like a hard thing, but it doesn’t necessarily have to be. Your credit score might have taken a pretty bad toll after filing for bankruptcy, which is why it is a must that you get back on your feet. Where there is no magic trick that will fix your credit overnight, you have to start from somewhere. You must begin with understanding how credit reports work and what you can do to improve your score. 

Some people might advise you to stop taking loans or using credit cards, but if you don’t open these accounts, you are never going to improve your credit score. Instead of swearing off credit cards and living your life in misery, you can monitor your credit closely, consider secured or retail credit cards if you want to open up an account, consider a cosigner if you want to get a loan, don’t repeat the mistakes that you have made in the past, and report the payments you make from your new credit lines to the bureaus. It will put you on the right track and improve your lifestyle.