Bankruptcy can be a necessary step towards financial recovery. However, it will also leave a mark on your credit report, making it difficult to secure loans, rent apartments or even get certain jobs.
But fear not, Californians! There are effective strategies you can implement to rebuild your credit score and move forward with greater confidence over time.
Become a payment master
Timely payments are the secret to a healthy credit score. This applies to all your existing accounts, not just new ones you might open later. Review your budget and spending habits to help ensure you can consistently meet your minimum payment deadlines. Consider setting up automatic payments to avoid missed payments due to forgetfulness. Even a single late payment can significantly impact your score.
Secured credit cards: Building trust one swipe at a time
Secured credit cards are a fantastic tool for establishing a positive credit history. Unlike traditional cards, they require a security deposit that acts as your credit limit. Using the card responsibly and making on-time payments demonstrates your ability to manage credit effectively. Look for secured cards that report your activity to all three major credit bureaus (Experian, TransUnion and Equifax).
Leverage rent reporting: Turn your rent payments into credit-boosters
Did you know that on-time rent payments can now positively impact your credit score? Several services can allow you to report your rent payments to credit bureaus for a small fee. This can be a great way to build a positive credit history, especially if you have limited access to other forms of credit. Check with your landlord to see if they offer rent reporting services or explore third-party providers.
Become an authorized user: Ride the coattails of a good credit history
Being added as an authorized user on a friend or family member’s credit card with a good payment history can piggyback some of their positive credit history onto yours. This strategy hinges on the authorized user account being managed responsibly by the primary cardholder. Late payments on the account can negatively affect both your scores. Try to ensure you trust the primary cardholder to maintain good habits before pursuing this option.
Rebuilding credit takes time and dedication. While these strategies can significantly improve your score, don’t expect overnight results. Be patient, consistent and celebrate your milestones along the way. You can also consider seeking legal guidance from a reliable legal team to develop a personalized credit rebuilding plan.