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How To Bounce Back From Bankruptcy.

How To Bounce Back From Bankruptcy.

Bankruptcy is not a pleasant experience and is often caused by different reasons. However, apart from the disadvantages bankruptcy may bring, such as ruined credit, it can also offer an opportunity to start afresh and learn from past mistakes.

 So, how can you bounce back from bankruptcy and build good credit again? Here are a few steps to consider.

  1. Get rid of unhelpful financial habits.

Once the source of a problem has been identified, it is easy to look for a solution. In the case of bankruptcy, this would mean getting rid of certain habits or actions that led to it in the first place, though in case of unforeseen circumstances, this would not be applicable. However, the proper usage and planning of your finances would enable you to be better prepared should unplanned events happen. 

One of the ways to prepare for unexpected events, in addition to adequately managing your finances, and ditching bad spending habits and money mismanagement, is to open an emergency fund account. This would help to cushion the effects of unexpected occurrences.

  1. Keep track of your credit report.

When you keep track of your credit report, you can monitor your progress and see how far you have gone in restoring your credit. Also, constant checking of your credit report can help you spot any errors that you may have missed previously. This will help you make better plans to restore your credit quickly by eliminating anything that brings bad credit.

  1. Setting goals to help you build and sustain your finances.

When you set goals in this regard, you can better align your actions and expenses to ensure they are met. They give you a clear-cut direction in which to follow, and they help you check bad money-spending habits. It is advisable to have both short-term and long-term goals. That way, you can celebrate small wins and keep pushing till your long-term goals are met. Everyone will have their own unique set of financial goals, but an example of a long-term goal is to build your credit score up to 700, and for short-term goals, a gradual reintroduction of credit products back into your lifestyle. Also, monitor your progress with your goals to know how much more effort you need to put in.

  1. Automate your payment of bills.

Settling your bills before or as at when due does a lot to boost your credit ratings. Thirty-five percent of your FICO score (a model used to calculate a credit score) is dependent on this. To ensure that you do not default in paying your bills, you can automate the process. That way, even if it escapes your mind, your bills get paid on time. Most bills make provision for automatic payments. Therefore, you should take advantage of it. 

  1. Have a budget.

Having a budget helps to be more intentional with your expenses, and as a result, more focused on rebuilding your credit score. A budget enables you to check excessive or impulsive spending and channel it into the repayment of your debts. When you restrict your expenses this way and see how your credit ratings are going up, you will stay on track with your financial goals.

There are different ways of creating a budget, and it ranges from basic to complex. But, the overall process is a simple one. All of this involves spending on the basics such as groceries, utilizing, putting some into savings, preferably a high-yield one, and paying off debts with the rest.

  1. Seek help from a good credit repair company.

Declaring bankruptcy can do a lot of damage to your credit score. Therefore, when considering ways to rebuild your credit, you could enlist the services of a good credit repair company. They can offer you actionable insights and see you through the process of rebuilding your credit. One of the things they could help with will be to rid your report of negative items, which will in turn help to boost your credit score. They, however, cost a decent amount of money; therefore, you should carefully weigh your options before enlisting their services.