Evaluating Your Credit After Bankruptcy | Frugal Finance

I?m holding my hands up here; I?m too young and not yet successful enough to have experienced bankruptcy. Make of that first sentence what you will. What I do know, from research and having spoken to people that have suffered bankruptcy is that it?s a particularly stressful time, the last straw. But I?ve also seen people who have gone through the experience and come through the other side more experienced and go on to make great successes of themselves. There is often the misassumption that those who have gone bankrupt can?t rebuild their credit (or even their lives) which is completely untrue. Though rebuilding credit might not be the first thing on someone?s mind after going bust, it can somewhat ironically be one of the first steps in building a healthier financial lifestyle.

Don?t Miss Another Payment

If you?ve gone bankrupt the likelihood is you won?t have many direct debits or bills to manage aside from ongoing utility bills. So your first step should be to try as hard as possible to set up direct debits for future repayments of ANYTHING. Not only does this help you manage cash flow (you simply won?t be able to pay for things you can?t afford) it will be a nod to creditors of your ability to pay on time and thus rebuilding your trust.

Seeking Instalment Loans

If you?re literally left following bankruptcy with nothing but the shirt on your back, there are some household and daily necessities which you will need to buy. Typically your first call should obviously be friends, family and second hand resources like eBay, but failing this you may look to instalment loans for large items such as washing machines, cars or other appliances. Obviously you?d have to be in the position to know you could afford the repayments, but assuming that you could, this can be a great way of rapidly rebuilding a credit score.

Secured Credit Cards

Secured credit cards are kind of like a cross between debit cards and credit cards, typically you will find more companies in the US than the UK that provide these types of cards. Essentially, you pre-pay, draw out and then add money to the card exactly the same as you would with a normal bank debit scheme but the card may have an additional limit that works similar to an overdraft. If you?re just recovering from bankruptcy, these types of cards can again help the speed of credit recovery, but typically try never to use more than 50% of the card?s limit.

Review Your Credit Report

This it kind of a catch 22 situation in that you have to pay to review your credit record which is not easy when you?ve got no cash. However, it can often be a worthwhile investment if you?ve got the opportunity to do so. You may be able to prove errors or anomalies in your credit report which will help your efforts with creditors in the future. Plus if you?re rebuilding your life after bankruptcy you want everything to be crystal clear, so building upon an accurate foundation is without doubt the first and best place to start. There are a shed load of personal finance blogs, credit advice resources and online forums available for you to research exactly how and what you should be looking for wen it comes to analysing your credit.

Keep Off Any Overdraft Fees

Just don?t arrange any overdrafts it?s as simple as that. Do everything you can to avoid the temptation. Overdrafts following bankruptcy may just be the first sign that you simply haven?t learned your lesson. Be sure not to accept any co-signing of a loan from a friend or family members as this will put an instant black mark against your name. Simply translated, co-signs are ?high risk? and creditors will be closely monitoring all your activity after any co-signing of a loan. Also, you put the co-signer at risk which adds further unnecessary stress to the whole situation.

Source: http://www.frugalfinance.co.uk/evaluating-your-credit-after-bankruptcy/

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