When many people think of bankruptcy they often think it is the end of their financial futures. Not only does bankruptcy need not be the end of your financial future, it can truly be the fresh start that gives you and your family a chance at a brighter financial future. Rebuilding your financial life is a puzzle that can be put together if you know how the pieces of your financial life work together. Here are some tips to make the most of your fresh start:
- STEADY INCOME IS KING: One of the first things creditors look at when considering a loan is your income and work history. The better your income and steadier your work history, the more likely you are to get a loan, even after a bankruptcy.
- GET A CREDIT CARD (BUT JUST ONE!) As long as you have a job, you will probably start getting pre-approved credit cards within months of getting a bankruptcy discharge. Here are the rules on rebuilding your credit with a credit card- (1) make a purchase on the card every month but never let the balance exceed 20% of the available credit, and (2) pay the card down to a $1.00 balance every month. You are probably saying “Shouldn’t I pay it off completely every month?” The answer is “NO!” The reason is that the credit scoring system gives you fewer points if you pay off a credit card completely every month vs. leaving a small balance.
- DON’T HAVE ANY POST BANKERUPTCY BAD CREDIT: This one speaks for itself.