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Rebuilding Credit After Bankruptcy—It Can Be Done

If you’re buried in debt that you can’t repay, declaring bankruptcy can allow you to start over with a clean slate. It can also lower your credit score and make it difficult to access credit in the future. With a strategy and dedication, you can rebuild your credit and achieve your financial goals.

Assess Your Income & Expenses

Start by taking a realistic look at your current situation. Obtain copies of your credit reports to see how your financial struggles have affected your credit scores. Knowing your credit scores can help you see how much work you have ahead of you. If you find any errors on your credit report, dispute them, so they don’t drag your scores down further.

Make a list of all your monthly expenses, including your mortgage or rent, utilities, car payment, personal loan, childcare and any other recurring obligations. Include estimates for food, gas, clothing and any other regular expenses. Add up all your costs and compare the total to your monthly net income. If your expenses are greater than your earnings, look for ways to cut costs and/or increase your income. Create a budget to correct your spending and set aside some money for an emergency fund. A budget will help take the emotion out of your spending.

Pay yourself first. By setting up ‘buckets’ with your Telcoe account(s) you can separate funds automatically on each payday. Christmas, Vacation, Emergency, Car Insurance, etc. are all ‘buckets’ or individual club savings accounts you can open for FREE with Telcoe and then ask your Telcoe Specialist to allocate the amount you indicate to each account every payday.

Strategies to Rebuild Your Credit

Telcoe offers products that are designed to help people in situations like yours rebuild their credit. You can consider a secured loan, which would allow you to borrow against money you have deposited in an account, or we can loan you money to be placed in a savings account that you could access after making payments—Telcoe Credit Builder Loan. Another option is a secured credit card with a credit limit up to the amount of money you have deposited in an account.

After you have obtained a loan or credit card, be careful how you use it. Keep the balance low and make payments on time. Doing those things consistently will help you gradually increase your credit score until you can qualify for an unsecured loan or credit card. Be careful not to open more than 1-3 new loan accounts after bankruptcy. Too much new debt is a common reason we see credit scores remain low after bankruptcy.

Your New Financial IQ

If you’ve declared bankruptcy, you can rebuild your credit and not pay astronomical interest rates. Assess your current situation, make any necessary changes and find ways to rebuild your credit. If you have a sound strategy and stick to it, you’ll be able to get yourself back on track. Much like healthy eating habits, you will want to continue to make positive improvements in your finances and avoid past pitfalls. Having honest conversations with all family members in the home on spending and needs vs. wants will help keep everyone working towards a common goal.

Telcoe has been partnered with GREENPATH FINANCIAL WELLNESS for over 10 years. This partnership allows Telcoe Members to empower themselves to lead financially healthy lives. Financial wellness is a key factor in people’s freedom to pursue their dreams. Greenpath envisions a world where people are ready for life’s ups and downs, and they have the tools needed to accomplish their financial goals. What are your goals for the future? Telcoe and Greenpath can help, every step of the way.


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