Contrary to common belief, life doesn’t end after filing for bankruptcy. A discharged bankruptcy case is an automatic financial reset button that you should take advantage of. You will still be able to buy a new car or get a credit card after bankruptcy. As you know, everyone needs a helping hand once in a while and this could be that hand or even the ride.
Your life will change after filing for bankruptcy and your filing will be on your credit history for the next 10 years. Your life shouldn’t stop. You can take the following little steps to get credit approval even after being in massive debt:
Personal budgeting is an important personal finance management process that is often complicated and misunderstood. Just because you are working and living on a budget, you shouldn’t deny yourself everything.
One of the things that personal budgeting will help you do is get credit approval. Get rid of unnecessary spending habits and work on habits that involve buying just the important things you need. By budgeting, you will also be able to save up some money for emergencies. The saved money will show creditors that they can eventually trust you.
There are credit counselling agencies that can guide you on the best personal budgeting strategies, working with your income and expenses. You may also take advantage of budgeting tools like Mint, Quicken, Buxfer, LearnVest, or Budget Tracker.
Work on improving your credit score
Your past financial issues will have damaged your credit score badly. However, it shouldn’t be the end of your world. A good credit score is important and you can rebuild yours by paying bills and debts in time, as well as reducing your over the limit debt and account collections. Wise credit use helps in rebuilding your tarnished credit score.
You can also sign up for free debt management courses that are offered freely or at a small premium. These programs will impart you with knowledge needed to repair your credit ratings. You will also gain insights on the habits that led to your poor financial decisions landing you in debt.
Obtain a secured credit card
A secured credit card can help you in getting approved for credit because you will have to deposit a specific amount of money into a bank account say $700 and this amount will be your new credit limit. You can gradually build your credit by gradually charging small amounts monthly to repay your debts as agreed upon under the Chapter 13 bankruptcy plan.
Understand how the credit score is calculated
Knowledge is power and the key to understanding your credit issues is knowing how your credit score is calculated. You will learn that your credit score is determined using elements like your payment history, the amount owed, the credit mix, the length of your credit history, and any new credit you take up. This knowledge will guide you in knowing which credit you can take and the ones that you can’t afford for future approval of credit.
In conclusion, there is a good life after a bankruptcy filing but it is only possible if you work on your finances to have a good credit standing. Finally, always choose a financial product or instrument that suits you.
Ray Flemming is a credit counsellor working with a leading Atlanta firm on bankruptcy and debt management. His advice on getting approved for credit after bankruptcy is covered comprehensively in his book ‘Life After Bankruptcy’. Learn more about the topic from his book or follow him on the different social media platforms.