It is always the last resort when you have no choice but to file for bankruptcy. Bankruptcy does give you a huge negative impact on your credit report and require longer time to improve credit score. However, how much can it be more destructive than trying to hold on to your massive debt and playing catch-up to pay down what you owe while knowing it is impossible?
After the bankruptcy, you can start to rebuild your credit. Although the bankruptcy will stay on your credit report for 7 to 10 years, the credit you just start to build will really help you improve your score a lot, assuming you always pay on time and keep very little balance.
So, how can you raise credit score after bankruptcy?
First of all, you should visit your local banks or credit union to see if they will give you a small loan to start with the credit building process. Chances are you will be required to pay a higher interest rate. So, make sure you borrow small amount, less than $1000, and pay it off in 3 to 6 months.
You should not worry too much about the higher interest rate, because as soon as you pay a few monthly payments on time and they are all reported on your credit report, you want to pay it off as fast as you can.
Secondly, secured credit cards are another great way to rebuild credit. You need to deposit some cash into an account with a credit card company that offers you this kind of card. Sometimes you can get these cards for as low as $300 to $500 credit limit, which is OK. Just make sure you always remember to pay your payments on time, all the time.
It won’t take long before you start to see your credit report showing improvement. Although your report will still show the bankruptcy record, you are actually working towards building good credits. It will take some time to see the jump on your scores; however, without a doubt, what you are doing right now is much better than struggling to pay off the debt that you just could not handle it yourself.
Believe yourself that you can rebuild credit and improve credit score after the bankruptcy. Yes, bankruptcy is a serious problem that can affect your ability to obtain credits in the future, but if you start the credit rebuilding process today, you will be able to see decent score again on your report sooner or later.