Improving Your Credit Score after Bankruptcy News Credit

Financial ruin isn?t fun for anyone. Filing for bankruptcy is often a last resort for those who are no longer able to pay their bills and support themselves on their current income. When you decide to file for bankruptcy, you will have several questions, including how long this is going to affect your credit score. The truth is that it really depends on the current state of your credit report and the type of bankruptcy you file. For example, filing chapter 7 bankruptcy will appear on your credit report for 10 years, whereas chapter 13 only shows up for seven years. Either way, it?s time to get that honey-do list ready because you?re not likely going to be able to buy a new house in the next several years, so you might as well get comfortable where you are.

Once your credit report shows your bankruptcy, you can start rebuilding your credit. You must be careful, however, because this does come at a cost. For example, you can apply for a charge account at a furniture store or other retail store once you file bankruptcy, but your interest rate will be sky-high. You can gradually begin to improve your credit score with this account, but only if you are careful. Be sure to spend on the account each month. However, do not spend more than 30 percent of the balance each month. For example, if your available balance is $1,000, do not spend more than $300 per month on the account. Last, but certainly not least, you must pay your balance in full at the end of each month because this is what is going to raise your score.

You can also help to build your credit score back up if you apply for a secured credit card through Visa or MasterCard. This card requires you to put down a deposit, and your credit limit on this card will not be very high. At the end of a year or so, provided you have made all your payments on time, your card company will relinquish the status of the card from secure to unsecured, which will help your credit report.

Always make all of your payments on time. You should make your mortgage or rent, cards, car payments, insurance payments, and any other payments you have on time every single month. This is the single best way to build your credit score. It is also the easiest way to ruin it. You must pay early or on time every single month, no excuses.

Filing bankruptcy is not something anyone actually wants to do, but sometimes you have no other choice. If you have to file, look at the bright side; in the seven to 10 years your credit report is affected, you can significantly raise your credit score so that at the end of that term you can go back to having a credit score that will allow you to buy homes and cars and have lower interest rates. Use this time to become financially responsible.

About the Author

Carly Lance is the blog manager for Personal Bankruptcy Canada, a company ofbankruptcy trustees that helps people before, during and after bankruptcy.

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Source: http://newscredit.org/personal-finance-guide/improving-your-credit-score-after-bankruptcy

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