A divorce, job loss, serious illness or another significant life situation can force you into unmanageable debt. And to deal with this debt, you may have considered filing for consumer bankruptcy.
Although filing for bankruptcy can provide financial relief, one of the consequences is that it can damage your credit score. According to Experian, a bankruptcy filing will also stay on your credit report for 7 to 10 years. Even still, there are things you can do to improve your credit ranking after you file bankruptcy.
Analyze your credit reports
Go over your credit reports regularly and look for any errors. These mistakes can make it harder for you to improve your credit score, so dispute them with your creditors and get them fixed.
Start using credit again
This may seem counterintuitive, especially after you file bankruptcy, but one of the most effective ways to start building credit is to start using it again. After bankruptcy, consider obtaining and using a secured loan or a secured credit card. You may also want to ask for a friend or family member to co-sign on a loan application.
Stay on top of your debt
Part of rebuilding your credit score may also involve rebuilding your finances. Vigilantly pay off your credit card balances, create and adhere to a budget and work on building up an emergency fund for unexpected expenses.
As you start using credit again and stay out of debt, your credit score will start to improve. These changes will not happen overnight but will be incremental over time, so remain patient and continue to practice good financial habits.