Make a post-bankruptcy plan to rebuild your credit

Once the bankruptcy is behind you, restoring your credit will be the next goal, and you can begin by putting together a plan of action in five easy steps.

1. Take stock of your situation

You can get free annual credit reports. Take a close look to make sure all the information is accurate. If there are errors, you will need to dispute them and see that the mistakes are corrected. You will also want to check your credit score—also for free—and look at the same score each month in order to track it accurately.

2. Develop a budget

Putting a budget together will help immensely when you are rebuilding your credit. You probably received budget counseling in connection with the bankruptcy process, and it will help you keep your finances in check.

3. Create your emergency fund

Make it a habit to set a little money aside each month. Having an emergency fund of even $200-$300 will help you take care of unexpected expenses so that you will not have to take a payday loan or use your credit card.

4. Apply for secured credit

A secured credit card is one that you back with a deposit, and the credit line is normally that amount. Having this kind of card after bankruptcy helps to build a good credit profile. Be sure that the bank or credit union you choose for your card reports activity not just to one, but to all three credit bureaus. You want to have your credit information recorded everywhere.

5. Make timely payments

Once you have put all the parts of your post-bankruptcy plan into action, keep it humming along by making payments on time every month. When you begin seeing an improved credit score, you will be proud of yourself and well on your way to a sound financial future.