If you file for bankruptcy, it’s important to know how to rebuild or repair your credit score. This score is going to go down due to the bankruptcy filing. This can make it more difficult for you in the future if you’re trying to get credit cards, get a car loan, take out a home mortgage or use other such financial options. You want to build that score back up so that you can have true financial freedom.
One way to do this is simply by borrowing money and repaying it on time. As simple as this sounds, a consistent pattern shows lenders that you are a trustworthy borrower once again. An example could be running small balances on credit cards that you know you can afford to pay off at the end of the month. But if your credit score itself prevents you from getting credit cards, how do you do this?
Secured credit cards
One option is to use a secured credit card, for which you’ll need a down payment. For instance, you could give the lender a down payment of $500. In exchange, you get a card with a $500 limit. You can use this credit card and build your score up by making those monthly payments. However, the down payment mitigates the risk for the lender.
Authorized users
Another potential option is to become an authorized user on someone else’s account. The card is in your name, but it still connects to their financial account – these are often used by parents and teenage children, for example. Since you’re an authorized user, there’s no risk for the lender, and it gives you access to this line of credit.
These are just a few things to keep in mind when filing for bankruptcy. Carefully look into your legal options.