Many across North Carolina hesitate to make the decision to file bankruptcy out of fear on how it will affect their financial futures. Will you be able to get a credit card or a loan? Will you be able to purchase real estate or a car? Will bankruptcy follow you around forever?
For those considering Chapter 7 bankruptcy, the bankruptcy will stay on your credit report for 10 years and cause an initial drop in your credit score. However, you can begin to take steps almost immediately after filing to improve your credit score:
Create a reasonable budget
While creating a budget may seem simple enough, it can help you to live within your means and create positive, productive financial habits. Find a system that works for you to consistently monitor your spending and savings habits to ultimately improve your credit score.
Make payments on time
You may have financial obligations that could not be discharged in bankruptcy, such as student loan debt, child support or alimony payments and more. Make all payments on time and when possible for debts like student loans or credit card debt, contribute more than the minimum payment.
Start an emergency savings fund
Emergencies like health scares, layoffs, car issues, broken air conditioners in the North Carolina heat and more can deplete your savings and rack up debt. Begin to slowly build up an emergency fund for these kinds of sudden, unexpected expenses. Your fund should be able to cover between three to six months of your regular living expenses.
Check your credit report
You can check your credit report from three different federal credit bureaus annually through www.annualcreditreport.com. Rebuilding your score can be especially challenging with incorrect or fraudulent information on your report. Reviewing this can help to catch errors in a timely manner and dispute them.
Apply for a secured loan or credit card
Secured loans and cards can be much less risky both for lenders and you. According to NerdWallet, secured credit cards typically have a limit which only amounts to a deposit you pay on the card upfront. This can offer the security you need to slowly build up credit before eventually applying for an unsecured card.
Rebuilding your credit score after bankruptcy is both possible and realistic. Taking small but steady steps to create productive habits can enhance your overall financial situation and your credit score.