The decision to file for bankruptcy isn’t one to be taken lightly. Working with a Licensed Insolvency Trustee, you will get relief from harassing creditor calls. But you will also have negatively affected your credit score for quite a while.
Some companies liken applying for credit after bankruptcy to starting all over again, but that’s not really the case. A young person who has never had credit also doesn’t have the history of an adverse relationship with creditors to overcome.
The modern world runs on the ability to obtain credit and use it wisely. When your bankruptcy is discharged, you will need to do the work to repair your relationship with credit. With that in mind, here are some suggestions to help you rebuild credit after bankruptcy.
Limit Applications for Credit
Every time you apply for credit, whether it’s approved or denied, the request appears on your credit report. If many applications appear on your credit history report in a relatively short period of time, that’s going to be a red flag. Try to limit credit applications to no more than 2-3 per year, especially in the first few years after bankruptcy.
Build a Cushion of Savings
For obvious reasons, lenders tend to favour people who can clearly demonstrate their ability to repay their loans. When you’re planning to borrow money again, it is in your best interest to have a cushion in the bank. A savings account will suffice, but since you’re rebuilding your relationship with money for the future, you should also consider long-term investment vehicles like RRSPs. These investments have a relatively low price of entry, and can help build your credit and your net worth while also reducing your tax burden and securing your financial future in retirement.
Learn a Love of Budgeting
One of the greatest things about working with a Licensed Insolvency Trustee is the financial counselling you will receive, which should give you skills that last long after the process is done. Gaining an understanding of how credit works, and how to use it within sensible limits, is an essential element of your future financial success.
When you choose to work with a Kelowna Licensed Insolvency Trustee, you’re taking the first step to getting out of debt and starting a new relationship with money. It begins with a single phone call and ends with confidence in your ability to get on track financially.
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