Many Tennessee residents consider bankruptcy as a way to wipe out debts and start anew financially. For many, though, the biggest hurdle is rebuilding credit. For those who have spent decades building credit, the thought of ruining this good credit and watching their credit score drop hundreds of points can be devastating. However, there are steps that a person can take to rebuild credit quickly after a bankruptcy.
The most important thing people can do after a bankruptcy is double-check their credit report for accuracy. There are mistakes in close to 80 percent of credit reports, so it is important to get these errors erased, so that a person’s credit score can rise.
The next step is to create a budget. Without a financial plan in place, a person is prone to file for bankruptcy again. That is why it is essential to track income and spending. When a person spends more money than he or she makes, that is a sign that spending needs to decrease, and this is possible when expenditures are recorded.
Once a person’s finances are in order, it is time to start rebuilding credit. This is possible with the right credit cards. There are cards specifically for those who have gone through bankruptcy or have poor credit. By using the card wisely and making payments, a person can show responsibility.
Bankruptcy is not the end of the world. Many people go through bankruptcy and end up with a credit score that is higher than it was before the bankruptcy. Lenders look for consumers who pay debts timely. By slowly applying for credit cards and loans, a person can eventually become qualified to buy cars, houses and other necessities. It takes a lot of work, but it is not impossible.
Source: USA Today, “Personal Finance: Re-establish credit after bankruptcy,” Robert Powell, July 3, 2014