Since the beginning of the COVID-19 pandemic, consumers from all walks have dealt with serious financial struggles. Millions of people are currently out of work, which means they have no money coming in to pay the bills. Many of these individuals will file for bankruptcy in the near future to avoid exacerbating the financial situation they are in. Approximately 2 million individuals file for bankruptcy in the United States annually.
If you have recently gone through the bankruptcy process, you are probably ready to get your life back on track. The process of rebuilding your credit after bankruptcy is very complex. Being persistent and educating yourself on how to improve your personal credit score will pay off. Here are some things you should do to rebuild your credit after bankruptcy.
After filing for chapter 7 bankruptcy, you will have some problems getting approved for things like low-interest loans or credit cards. One of the biggest mistakes people make is failing to apply for new credit after bankruptcy. While you will have a higher interest rate, it is still a great way to start rebuilding your credit.
Generally, secured credit cards are one of the easiest financial tools for a person who has been through a bankruptcy to get approved for. These cards generally require you to pay a cash deposit in order to get approved for a line of credit. You also need to look into things like credit builder and small installment loans.
Getting financing for a car or home is a very difficult process. Since you already have a strike against you with a past bankruptcy, you need to make sure the other criteria considered by a lender is flawless. When deciding whether to approve you for a loan, a lender will check things like your debt to income ratio and how long you have been at your current job. Generally, the longer you have been at the same job, the easier it will be to get approved for a loan.
This is why you need to stick with your current job for a while if possible. Working for the same company also provides the added benefit of getting pay raises and promotions.
Another factor that lenders consider when trying to approve a loan is your payment history. Even one missed payment can do lots of damage to your personal credit report. This is why you need to do all you can to avoid missing any payments. Most credit card companies provide autopay options. With this option, you can get payments directly drafted on the same day each month. Keeping your finances organized is also crucial when trying to avoid this common problem.
If you are in over your head financially and need help figuring out your next move, schedule a consultation with the Hedtke Law Group today!