There is no way around it. A bankruptcy filing will drag down your credit score. However, if your score was already low to begin with — perhaps because of missed payments — it can only fall so much lower.
Regardless of your credit score before filing for bankruptcy, it’s imperative that you take action to improve it afterward. Here are five of the best steps to take:
1. Review Your Credit Report and Score
This is where it all starts. Review your credit report and score so that you know exactly what you’re up against. If you don’t know your starting point, it’s impossible to know how much progress you’re making.
2. Be More Responsible With Your Finances
If you continue down the same path that led to bankruptcy in the first place, you can’t expect things to take a turn for the better. You need to make a pact with yourself that you’ll be more responsible with your finances. This means paying your bills on time, avoiding debt, and beginning to save for the future.
3. Get a Secured Credit card
You may not qualify for an unsecured credit card, but that doesn’t mean you’re out of options. You can get a secured credit card with which your deposit acts as both your credit line and security deposit.
4. Find a Credit Card Co-Signer
Forget about applying for a credit card on your own. Find a co-signer who’s willing to help you get your finances back on track. This can be anyone from a parent to a sibling to a close friend. Just remember that you’re both responsible for the credit card. If you run up a bill that you can’t pay, it could take a toll on your relationship.
5. Track Your Progress
Just the same as reviewing your credit report and score upfront, track your progress to ensure that you’re on the right track. Answer questions such as:
- Is your credit score increasing?
- Are you avoiding new debt?
- Are you beginning to save money?
- Are you responsibly using a credit card?
As long as you continue to make progress — even if it comes slowly — you’ll end up where you want in the end.
Don’t expect your credit score to rise overnight. Instead, it’ll take several months or longer of doing all the right things to see a positive impact. As long as you stay the course, you’ll end up making progress and realizing that everything you’ve gone through was well worth it.