After filing for bankruptcy, you may feel as though your credit is beyond being resuscitated. It will be part of your financial ""permanent record"" for all eternity, and it will be impossible to take out a loan-right? Well, you might be surprised. By taking some basic steps, you can boost your chance of getting a loan-and eventually making your credit report clean as a whistle:
1. Avoid spending cash.
Remember that your goal is to fix your credit report. That means that you'll need to secure credit, and then use it responsibly. While spending cash will avoid bad credit, it will also prevent you from building ""good"" credit. The key is to secure credit, and then use it responsibly.
2. Reduce your spending.
One of the causes of bad credit is simply spending beyond our means. The most effective way to do that is to create a budget. Make sure to streamline it as much as possible, to prevent any unnecessary spending. Too often we have difficulty distinguishing what our true ""wants"" and ""needs"" are. It turns out that we really don't need bacon double cheeseburgers and outfits for our pets.
But keep in mind that a budget is only effective if you stick to it. While you could engage in some minor discretionary spending, try to minimize it as much as possible. And periodically revisit your budget, to determine how you can further reduce the fat in your budget.
3. Be patient.
You probably didn't ""earn"" bad credit over night, so you shouldn't expect to fix it in one day. Instead, be patient as you gradually strive towards good credit. To motivate yourself, envision that you've already earned good credit.
4. Use your credit sparingly.
As a general rule, don't use more than a third of any credit that you're able to secure. This follows the basic rule that ""no credit is better than bad credit."" Using your existing credit sparingly will demonstrate that you have more fiscal discipline than when you were maxing out your credit cards. Follow this rule even when using secured credit cards; avoid using more than a third of your available credit. Following this rule will give you the best chance for finding the best deal.
5. Avoid high fees and charges when applying for secured credit cards.
You might assume that you'll need to pay sky-high amounts when applying for secured credit cards, due to your bad credit. It's not true! Yes, it will be more difficult to find credit cards with lower fees and charges, since creditors will be taking a bigger risk by supplying you with credit. However, you should still shop around. That will help you to find credit cards with no application fees, and relatively low fees and charges. Make sure to compare at least three comparable credit cards, in order to find the best one.
While bad credit isn't the best financial situation to be in, you can still dig yourself out. These tips will help you to scratch and claw your way back to a clean bill of financial health.
Graeme has been writing articles for nearly 3 years. He enjoys keeping fit and music but his current passion is parenting. Take a look at his selection of educational toys including Little Tikes Swings and the Little Tikes Jungle Gym, both of which stimulate the mind and help to keep children active.
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