Rebuilding Credit After a Banktruptcy
- 1). Apply for a secured credit card or personal line of credit. After bankruptcy, it's important to establish a track record of making timely payments. Credit card companies offer secured credit cards, which require a deposit, to consumers struggling with credit challenges. Another option is a secured personal line of credit. This loan requires collateral for the loan, such as a vehicle or other valuable item.
- 2). Pay your debt obligations on time. Timely payments have a serious impact on your credit score. Paying debt obligations on time each month will rebuild your credit over time. If you struggle with making timely payments, consider setting up automatic payments with your financial institution. This will safeguard against late payments.
- 3). Use credit wisely. Credit cards and personal loans should be used for the sole purpose of rebuilding credit. Pay your balance off every month. Credit card balances that exceed 35 percent of the available balance will negatively impact your credit score, according to MSN Money. Keeping your balance below this threshold has a positive effect.
- 4). Avoid closing old accounts. After you've paid off a debt obligation, it might be tempting to close the account. However, leaving these accounts open (without a balance) can positively impact your credit score. Monitor the account periodically to ensure that there isn't fraudulent activity.
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