It’s become common for people to file for bankruptcy in today’s world. It’s not a first choice, but it is a way to be relieved of debts that a person might feel overwhelmed and unable to pay. While bankruptcy is not a financial death sentence, it does have a negative impact on the filer’s credit. A person with an outstanding score in the upper 700 range will find that their score drops to somewhere between 540-560 after bankruptcy. This can be changed, however, with time and effort. Here are the things to do to rebuild credit after bankruptcy.

Know the credit score

If someone is trying to rebuild credit after filing for bankruptcy, the first step is knowing what their current credit score is. They may already know that it’s low, but knowing the exact figure is critical to knowing how much work is ahead of them and what they need to do.

They also need to go over their full credit report and ensure there are no inaccuracies. If there are, they should contact both the creditor and the credit reporting agency to dispute the mistake.

Open a new bank account

A new checking and savings account is an excellent opportunity to display financial stability. A clean slate to start fresh with paying bills on time and saving money can help prevent past mistakes from being repeated.

Additionally, when signing up for the new account, they should ask about signing up for automatic online bill pay. This will help to ensure that bills are paid on time and in full, which is a huge help in improving their credit.
Apply for a secured credit card

Many people believe that since credit cards are often what got them into bankruptcy in the first place, a new card is a bad idea. A secured card, however, is one of the best and easiest ways to rebuild credit. It’s secured with a payment the card owner makes, which also sets the credit limit. This makes it very difficult to get into trouble with this kind of card.

Get a gas or retail store card

Gas or store credit cards are another ideal way to rebuild credit. They often don’t require good credit, and some even cater to those with bad credit. Use a gas card to make the gas purchase that would be made anyway and set aside the cash to pay for it. Use a retail store card in the same way. This can help to quickly rebuild credit, as well.

Pay off balances in full each month

Whether it’s a gas card or a secured credit card, paying the balance in full each month is a critical step to rebuilding credit. This shows that the card owner is not a risk and demonstrates financial responsibility. It also has a significant effect on credit scores.

Continue to monitor credit scores

Even as they go through each step of this process, people should be keeping an eye on their credit score. By checking it about once a month, they should begin to see the effects of their hard work, which will motivate them to continue working toward their goal of improving their credit.

This will be a slow process. Bankruptcy can impact credit for up to 10 years. By starting sooner, they can lessen the impact, but it will still be take time. Patience will be key to this process.