Rebuilding your credit score after bankruptcy does not have to be a monumental task, as long as you follow three simple rules. Although these are not the only rules you must follow to achieve financial prosperity, they a basic start. Although these rules are simple to understand, they require discipline to execute.
Do not miss bills and payments.
Although this rule is simple enough for everyone to understand, it is one of the more difficult rules for people to follow. The reason is because people have unlimited desires, but only limited income. The key to following this rule is to create a monthly budget of your necessary expenses, such as rent or mortgage, utilities, car payments, food, and gas. Then budget your monthly income and set up automatic payments or put money away in a different account. If you do not have enough money left over after necessary expenses, cut out the entertainment and luxury purchases in your life. This way, you can avoid missing bills and payments and prevent them from going into collections.
Apply only for necessary credit.
Once you have created your monthly necessary expenses budget, apply only for credit that meets your budget. Do not apply for any more credit than you need, and be sure to call your creditor and tell them not to increase your credit without your authorization. This rule will ensure that when you get the itch to make an entertainment or luxury purchase, you do not have the credit to do so.
Do not close your accounts.
After following rules 1 and 2, you may find that you have been able to keep your monthly balance at zero. This is a great accomplishment, and you should be proud of yourself! However, do not close these accounts. Keep them open to maintain a credit balance and revolving credit on your credit report. Continue charging and paying off your credit balance every month, and your credit score can be rebuilt in no time.
The key here is to be conscientious of your monthly necessary expenses and your personal spending habits. By following these simple rules, you can reign in your spending and rebuild your credit score. In time, you can build a respectable credit score.