If you’ve had to file for bankruptcy, you may feel overwhelmed. While it is true that bankruptcy impacts your credit rating, there are ways to rebuild.
Remember, bankruptcy is an opportunity for a financial fresh start. Here are a few tips that should help you rebuild your credit score post-bankruptcy.
Set a post-bankruptcy budget
While it may sound simple, creating a budget can help to rebuild your credit score. By understanding in detail your income and expenses, you can prioritize bills that must be paid and expenses that aren’t essential.
A budget helps you avoid overspending. It also ensures you pay your utility bills and other essentials on time, which is one of the most effective ways to start rebuilding your credit.
Don’t rely too much on credit
Post-bankruptcy, you may still have some access to credit. It’s important to try not to rely on this too much. Having a low reliance on credit builds trust with lenders and improves your credit score long-term. General recommendations are to have a credit utilization ratio of less than 30%.
Stay on top of your credit report
Monitoring your credit report is an essential part of improving your financial health. There are numerous websites, such as Experian and Clearscore that give you instant access to your score. Not only does this allow you to check for areas of improvement, but you can see the progress you have made.
Bankruptcy can be tough initially, but it’s important to see the positive side. It’s a chance for you to start again and rebuild your financial security. To obtain more information on the process, it may help to seek some legal guidance.