How to Build Your Credit After a Job Loss and Bankruptcy
- 1). Stop digging, no matter how deep a hole you find yourself in. Buy nothing you can't afford to pay for in cash. Cut back on unnecessary expenses. Pare down your budget until it matches your income.
- 2). Get a job, if you don't currently have one. Treat your job hunt like full time employment. This means you spend 40 hours actively looking for work every day until you find a job. Bear in mind that some jobs will be unavailable to people with a bankruptcy on their records, most notably jobs in law enforcement, those requiring security clearance, and some jobs in the financial sector.
- 3). Create an emergency cash reserve of $1,000 to $2,000. You can do this by whatever you can each month. Build this reserve as quickly as possible. Having this cash on hand will help you avoid going further into debt when an emergency arises requiring you to spend cash.
- 4). Put all your utility bills on automatic bill pay via your bank. This will help you avoid forgetting to make payments, which may result in negative reports to your credit file.
- 5). Get a single credit card. Many people are surprised to find themselves deluged by credit card offers immediately after filing bankruptcy. The offers are typically for high-interest, low-balance cards with exorbitant annual fees and late fees as high as the law permits. Make a single purchase with the card each month, which you pay off immediately from your cash income. Do not use this card for any reason other than the single, immediately paid-off purchase.
- 6). Be patient with yourself and with the process. You may "fall off the wagon" from time to time, but that's no reason to give up on rebuilding your credit. Fully recovering your credit will take, literally, a decade. Stick with it and trust the incremental improvements to add up to real change.
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