A Chapter 13 bankruptcy not only offers a consumer relief from a mound of debt but also the opportunity to re-establish a positive financial life.
A strong credit score contributes to the strength of a personal’s financial health. A person should focus consciously on this after filing for bankruptcy and receiving the bankruptcy discharge.
Start with a credit review
As recommended by NerdWallet, a consumer should carefully review her or his credit report after a bankruptcy. This provides the chance to find and address any errors that may appear on the report. From there, a person should plan to regularly monitor credit reports and scores.
Get and use credit
CreditCards.com explains that obtaining and using credit wisely directly supports a person’s efforts to rebuild good credit after a bankruptcy. One smart tactic involves paying a regular monthly bill, like a utility bill, with a credit card and then paying the credit card off in full every month. By charging only small amounts and paying them promptly, the consumer avoids interest charges and displays the ability to responsibly use credit.
Secured credit cards
With a secured credit card, a consumer prepays the bank an amount generally equal to the credit limit. This payment acts as a form of collateral. These cards often provide a first step back into obtaining credit for a consumer fresh out of bankruptcy.
Authorized user status
Another way people take steps to a better credit score involves getting added as an authorized user on another person’s credit card account. Consumers should do their research to ensure the creditor reports information on the part of the authorized user as well as the account holder.