Rebuilding your Credit

Rebuilding credit after bankruptcy often feelings like a losing, uphill battle. Bankruptcy can stay on a credit report from anywhere between seven and ten years. Individuals knew they were in for this once they filed the paperwork for bankruptcy, but did not realize just how difficult it may be. While many think rebuilding credit cannot be done, it really can be if people follow these few simple steps and realize that as Rome was not built in a day, it will take time to rebuild credit.

Create a savings account and make regular deposits. It is a great place to store extra cash for those with a new budget. By law, banks cannot refuse anyone a savings account, even if they have bad credit. When depositing paychecks into a checking account, have a percentage go directly into savings. Savings accounts create collateral that can be used in the future when looking for a loan.

Pay all utility bills on time and pay rent before it is due. Paying utilities on time will build up credit. Paying rent before its due allows time for the rent check to clear and it puts the renter in a positive light with the landlord.

Get a secured credit card (only one). Secured credit cards work just like unsecured aside from one difference – secured cards are backed up by money in an account. The credit limit equals the amount that is secured for the card. Only get one card, as that is all that is required to build up credit. Always keep the balance low and pay it on time. After six to 12 months, with an improvement in credit rating, individuals can switch it to an unsecured card.