One of the most common misconceptions about bankruptcy is that you can never get a loan or line of credit afterward. People assume that filing bankruptcy means your credit is destroyed and you won’t be able to borrow again in the future. They often weigh this against the benefits of eliminating their debt when deciding if they want to use bankruptcy or not.
It’s important to clear this up because bankruptcy certainly does not ruin your credit forever and you can absolutely get loans and lines of credit in the future. You just need to know how to rebuild your credit score after filing.
Get a secured credit card
One important step to take is simply to get a secured credit card. You have to give the credit card company a down payment. This is what secures the card and prevents there from being any risk to them. You can then use this card to make purchases and pay them off every month, gradually increasing your credit score. Many people use this as a stepping stone to getting back to a more traditional card that doesn’t need the down payment.
Make every payment on time
It’s also critical that you approach your future debt in a positive manner, making every payment on time and paying the full amount each time. That sort of consistency is really going to help your case. And missing payments, after you filed for bankruptcy, can definitely lower your credit score again. Create a budget and work hard to make sure that you stick to it.
Find someone to co-sign
Another tactic to get loans in the future and build up your credit score is just to find a cosigner. This could be a spouse or another family member. When they co-sign on the loan, they are agreeing to pay if you’re not able to do so, so they are often able to get loans that you wouldn’t qualify for on your own. However, if you do make all of those payments on time, this proves to the lenders that you’re able to do so and increases your score.
If you are interested in using bankruptcy, take the time to really learn how it works and what benefits it has.