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How to improve your credit after bankruptcy

No matter your reason for choosing bankruptcy, once you have filed you should have the feeling of a fresh start to your financial future. Fresh starts however mean you are back at square one and you will need to do some work to get your finances in order.

Bankruptcy causes a significant impact on your credit report that can last up to ten years. The way your credit report looks affects loans you will try to take out for cars, mortgages and other types of loans. After bankruptcy you may notice your credit score go way down, but it does not have to stay there. Building your credit back up just takes a little time. While not a comprehensive list, here are a few tips you can start right away to get your credit built back up after bankruptcy.

Keep an eye on your credit report

The information in your credit report determines how you stand financially. By monitoring your credit report, you can notice any discrepancies immediately and work on getting it removed. It can take time for an item to be removed after you dispute it, so constant monitoring means incorrect information does not hurt your credit score for a long period of time.

Pay your bills on time

The main reason you can get a loan with a sensible interest rate is because lenders can see you are able to make payments. When your credit report shows late payments, missed payments and collection notices, your credit score will continue to plummet. After you file for bankruptcy, one of the biggest impacts you can do to rebuild your credit is to show you are taking your finances seriously by staying current on all your bills.

Get a credit card

One of the ways to start showing your new financial responsibility is to get a credit card and make timely payments on it. Most likely it was credit card debt that made you choose bankruptcy, so you will need to be extra careful now. You will probably need to start off with a secured card and establish a payment history before you will get an unsecured card. Your goal is to show you have credit available and you are making payments on time. Be careful to not get carried away and put yourself back into financial stress. A good guide to follow with credit cards is to only use 30 percent of the credit limit and pay off as much as you can every month.

Keep credit card accounts open

If credit cards become a burden to you and it feels like they may push you financially to where you do not want to go, resist the urge to cancel them. A better solution is to cut up the cards to keep you from using them. Having available credit will help your credit score as well as how long you have had that credit option available.

Keep in mind that reestablishing your credit takes time and patience. Your credit score will not magically shoot up overnight. When you start a financial plan and stick with it you will soon find yourself with a credit report that is reflective of where you want to be.

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