4 Ways to Fix Your Credit Score After Bankruptcy

Deciding to declare bankruptcy is a major decision that will not only affect the state of your finances, but it will also knock your credit score down a few points. Filing for bankruptcy could stay on your credit report for up to 10 years, which could show lenders that you are not responsible with your debt. Digging yourself out of this hole can be tough, but fixing credit is not a lost cause. Here are a few ways you can fix your credit score after bankruptcy:

Checking your credit report
As you are preparing to fix your credit after bankruptcy, you should take a hard look at your finances. By getting a better sense of what your spending habits were or any missteps you may have taken, you will get a better idea how you came to this predicament and avoid it in the future. One way you can look at your credit is by running your credit report. This document is a comprehensive account of your credit history. It will show several different components of your finances including any time you were late on credit card payments, defaulted loans and even bankruptcy filings. You are allowed a free credit report from each of the major credit bureaus – Equifax, Experian and TransUnion – once a year. This can be a great financial tool to use that can point you in the right direction of fixing your credit.

Making payments on time
There are no overnight ways to raise your credit score, but one of the easiest ways to bump it up a few points is by paying your credit card bill on time. Payment history accounts for 35 percent of your credit score, so by simply making these payments on time you will be able to raise your score.

If you have trouble remembering when this payment is due, try setting up a calendar reminder on your phone or write down a note in your daily planner.

Creating a budget
While you are in bankruptcy and trying to fix your credit, you may be cautious about your spending habits. Overspending may have been one of the reasons why you got yourself into this predicament, so you want to do your best to make sure you don't end up in this situation again.

To help curb spending, you could try creating a budget for yourself. This process is as simple as writing down all of your expenses and allocating the proper amount of your income to each during the month. By creating a budget, you will be able to look at your spending habits, stop overspending and save some more money.

Cautiously opening up new lines of credit
As you continue to fix your credit and save money, you may start to feel more comfortable with your finances. After a few years if you feel ready and your finances are in a good place, you may be set to get a new line of credit.

It may seem counterproductive to open new lines of debt, but you need to build credit in order to repair your finances. You generally want to wait until after your bankruptcy has been discharged to go this route and you should apply for a secured credit card. This type of credit card will only allow you to spend what you put on it. For instance, if you need to pay a $75 bill, you will put $75 on the card. By using this type of card and only putting a small amount of money onto it, you will be able to curb overspending and rebuild your credit in the process.