Bankruptcy does not have to ruin your credit score. Though you might suffer from a temporary penalty, you can take steps to improve it in the short and long term. Unfortunately, damaging your credit score is much easier than increasing it.
Never give up on improving your credit score. The benefits of good credit far outweigh the difficult aspects of reaching your goal. See below for tips on improving your credit score after filing for bankruptcy.
Get a free credit report
Your first step should be to get your free credit report. Currently, Experian, Equifax and TransUnion offer free weekly online credit reports. Check your score to ensure that Chapter 7 discharged the appropriate debts and that no one commits identity fraud against you.
Apply for a secured credit card
Secured credit cards help to build your credit score because you essentially borrow against yourself. This removes a significant amount of the risk associated with using credit cards. To use a secured credit card, you pay a security deposit to the provider and use that as your credit limit. Whatever amount you can afford to pay becomes your line of credit.
Become an authorized user
Another valuable way to increase your credit score is to become an authorized user. Ask to become an authorized user on someone’s credit card, and you receive some of the benefits of regular, on-time payments. You should not rely on this method for your primary strategy, but it provides passive boosts to your credit.
Besides the tips described above, there are many ways to improve your credit score. Filing for Chapter 7 is a difficult decision, but it may lead to an even better credit score in the long run than when you started.