Once your bankruptcy is resolved and many of your unsecured debts have been discharged, take a moment to celebrate that this challenge is now over. You will, of course, still have living expenses and may also have some debts that were not included in your bankruptcy, such as child support and student loans. It’s important that you continue to stick to your budget and live within your means, and you’ll also need to take some steps to improve your credit score. A good first step is to request copies of your credit report from the three major credit reporting agencies: Experian, Equifax, and TransUnion.
Assessing Your Report
Cleaning up your credit report is something you can do on your own, even though there are companies that you can hire to do it for you. They may charge high fees and make promises they can’t keep, such as saying they can erase negative aspects of your credit or delinquent accounts. The thing that you can do to clean up your credit report and improve your score is to simply ensure that the information that is listed is accurate. Sometimes accounts that belong to someone else will show on your report, especially if you have a common name, and these can be removed. Also check the status of the accounts listed; if you’ve closed an account, the report should say “closed” and why, such as “paid off” or “discharged in bankruptcy.” Keep an eye out for old accounts and negative events that can be removed from your report. The time limits vary by state, so if the account has been listed for several years, look into this.
After you’ve assessed your report, make a list of things that need to be resolved. You may also want to locate any supporting documents, such as bankruptcy discharge paperwork or final payoff statements. Then determine how to contact each agency to request the information be removed, whether that’s a phone call, written letter, or online form.
Once your report is accurate, you can request a new copy each year for free from the reporting agencies to continue to monitor what is listed. At the same time, there are strategic things you can do to re-establish your credit. Make sure you have an accurate budget that you can stick to; if things get tight, it’s time to make revisions. If your income has increased, it might be time to bump up your savings or retirement accounts. Making each and every payment on time can help to improve your credit score and show a positive credit history. The single best way to rebuild your credit is to get a small credit card, even if it’s secured. If you make small purchases that you pay off on time each month, you’ll see your score go up.
Saving for the Future
Living on a budget can sound restrictive, but it actually gives you more control over your finances. You can design your spending based on your individual priorities and goals. Instead of putting all your money toward paying off debt, you can save and enjoy life’s rewards without the burden of paying it off afterward. This may take longer, but having a healthy financial situation is worth the effort.