More than 700,000 people filed for bankruptcy in 2017. You’ve probably heard that a bankruptcy can remain on your credit report for up to 7-10 years. If you have filed for bankruptcy or are considering it there is good news. Credit repair and normalcy doesn’t have to be 7-10 years away. A study published by Lending Tree in 2018 found that 65% of people who filed bankruptcy had a credit score of 640 or higher after two years of filing their bankruptcy. There are ways to a faster and smoother recovery after bankruptcy if you have the right plan.
Reputable Credit Repair Can Help You
Most people don’t realize that once a bankruptcy has been discharged, many of the negative accounts included in the bankruptcy will still remain on the credit report for 7 years and continue to lower the credit score. However, with a good credit repair company, it’s possible to remove these negative accounts much sooner to help raise your credit scores.
Use a Secured Credit Card
The first thing you can do to help with credit repair after a bankruptcy is open a secured credit card. It’s possible to find a secured card that does not charge an annual fee. With a secured card you must provide a deposit. Your credit limit will be assigned based on your deposit amount. Make sure that the secured credit card reports to all three credit reporting agencies.
You do not need to use the secured credit card for it to report a good payment history to the credit reporting agencies; however, you should make a purchase once every 6 months to keep the card active. Or, a good way to achieve this is by setting up a monthly recurring expense to a service that is subscription based, like Netflix, for example. Make sure you pay the balance in full and on time every month.
When you use a secured credit card this way the low utilization sends a signal that you are responsible and will not max out available credit. Your on-time payments demonstrate that you are a good credit risk.
Monitor Your Credit Score
Consider signing up for a free credit score service. You can keep your eye on your credit report and watch your score improve. Once your score reaches 700 or higher, you will start to receive a lot of mainstream offers. The goal is to transition from your secured credit card to a standard no-fee credit card. However, once you get the standard card you should use it the same way you used the secured card.
Remember What Led You to File for Bankruptcy
Always keeping in mind what led you to bankruptcy and understanding it is critical for a speedy bankruptcy recovery. For some people, an unexpected loss of job or medical expense might have been the catalyst. But for many, chronic over-spending is the core issue. Unfortunately, many who find themselves in bankruptcy realize too late they never learned the money management skills needed to stay out of bankruptcy.
A good credit repair company can help you identify what led to your bankruptcy and give you the tools needed to not only expedite your recovery but to help you financially flourish going forward.