After chapter 13 bankruptcy, it’s time to rebuild your credit. Although filing bankruptcy is the debt management option of the last resort, according to the U.S. Federal Trade Commission (FTC), it does offer a fresh financial start. When rebuilding your credit after chapter 13 bankruptcy there some things to avoid. For instance, it’s vital not to hurriedly borrow money. Thus, it’s important to set aside an amount of money for emergencies. This may require you to open a savings or checking account which can help rebuild your credit.
Don’t Live Beyond Your Means
One way to rebuild your credit is to live within your means. This means if you can’t afford an unnecessary purchase, don’t buy it. If you absolutely have to buy, save up the money then pay for it. You should also pay your bills such as student loans on time. If you can, always pay more than the minimum amount.
Obtain a Credit Card
Apply for secured credit cards. The secured credit cards require you to complete an application and deposit money into your account. Once the credit application is approved, you can make purchases just like you would any unsecured credit cards. The best part is that you can only use the money you have in the account. Also, the secured credit card companies will report to credit bureaus about how well you are keeping your credit current. However, before obtaining a new secured credit card make sure it’s on that benefit you. For instance, the secured credit card should have an application fee. Also, the company should increase your limit after a year of on-time payments.
Avoid Credit That Will Take Your Credit
There are some things you should avoid when rebuilding your credit after chapter 13 bankruptcy. For example, avoid payday lenders. These lenders will typically off you a loan with extremely high interest. In addition, stay away from unsecured credit cards. Unsecured credit cards require no money to deposit. They come with a credit line and interest rate. Unfortunately, you may receive a high interest rate because of your bankruptcy.
Seek Legal Help
If you want help rebuilding your credit, be careful. Predatory lending scams and scammers are everywhere and won’t help you rebuild your credit. So, after chapter 13 bankruptcy, contact a lawyer. The lawyer will assist you with ways to rebuild credit.