While bankruptcy provides a fresh financial start for many people, it is assumed that there are long lasting consequences.
Presumably, a bankruptcy has negative effects on a credit score for up to 7 years after the bankruptcy was filed.
However, just because the need for bankruptcy is correlated with credit damage, it doesn't mean that you can't begin proper money management practices today! Money Management Techniques to Improve Credit Several bankruptcy situations such as a Chapter 7 allow the credit score to improve in as little as a year after the bankruptcy as filed.
In other words, while a bankruptcy has consequences, being responsible in its aftermath can create rewards as well.
After all, a bankruptcy is supposed to be a fresh financial start, so be sure to reestablish your money management for the smoothest financial recovery possible! It might seem counterintuitive, but one of the first things you want to do after the bankruptcy process is open a secured credit card.
It's time for you to begin rebuilding your credit.
Using a secured card is an option that allows you to spend, but keeps the spending in check.
If you deposit $800 onto the secured card, then your limit becomes $800.
This keeps you from spending more than you have while raising your credit score.
It's similar to a prepaid card, but unlike prepaid cards, secured cards can affect your credit score.
Use this secured card to pay bills on time, shop online, and for other uses that will report your spending activity.
Consider a New Car Now, don't purchase a new car for the sake of buying a new car.
However, if you need a new car in the aftermath of a bankruptcy, this might actually be an opportune time to consider it! Dealerships have lower approval standards, which increase your chances of being approved to finance a car.
Since you're making such a major purchase that you can pay on time, you will be improving your credit.
This shows that you've learned from the bankruptcy and have improved your money management skills.
Avoid this Money Management Mistake Immediately after a bankruptcy, many individuals are so emotionally distraught and worried over their credit that they are desperate to improve their credit score no matter what.
Scammers and fraudulent companies are preying on these emotions to take advantage of people struggling financially.
Avoid trusting services that claim to improve your credit in a short period of time.
Only proper money management over the course of a few months and years can improve your credit score after a bankruptcy.
Any individual claiming to be able to rebuild your credit quickly is likely trying to scam you.
Finally, don't make the same mistakes twice.
Be sure that you've learned from your bankruptcy and the mistakes that lead up to it.
Also be sure that the new money management techniques you've acquired become part of your financial lifestyle.