My Top Three Tips for Rebuilding Credit

Photo credit:  Lending Memo

Photo credit: Lending Memo

Credit scores have never been more important. If you're looking for an apartment, applying for a job, or trying to get utilities set up, your credit may be checked.  Having a good credit score can lower your interest rates on a mortgage or car loan.  It can even qualify you for better insurance rates.   So is there hope once you've gone through bankruptcy?  Of course.

Rebuilding your credit is a matter of time and discipline.  Here are what I consider the three most important tips.

1. Let time go by. Negative items (for example, a charge off or a late payment) can only stay on your credit report report for 7 years. Let some time go by and negative items will begin to disappear. 

2. Don't get behind again. You need to keep your post-bankruptcy credit report clean. That means don't fall behind on utility payments, cell phone bills, car loans, student loans, or other debts. If you need to figure out a strategy to make student loans affordable, look into consolidation or income-based repayment plans. 

3. Try credit again--in moderation.  Consider signing up for a credit card with a very low limit. Many banks will offer a card with a limit of a few hundred dollars.  Other banks offer "secured" credit cards.  That means you make a deposit of, say, $100, they give you a card with a credit limit of $100.  Even if you can't make a payment, you've already protected yourself by "pre-paying" the card.