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Steps to rebuilding credit after declaring bankruptcy

Some Kentucky residents who have filed for bankruptcy might be concerned that they will be unable to rebuild their credit. However, even though a bankruptcy remains on the credit report for a number of years, they can start to rebuild their credit when the bankruptcy is discharged. Payment history is a significant part of a FICO score, and creating a budget can help ensure that a person pays on time. A budget should also leave room for a person to create a savings account. This emergency fund can help keep a person from falling into debt again.

Another step is regularly reviewing credit reports. There are three credit agencies that offer one free report each year, and a person should contact the agency about any mistakes.

Using a credit card is another way to build credit. A person should charge small amounts to the card, such as gas, and pay it off each month. A person who is unable to get a regular credit card might be able to get a secured credit card. This allows a person to put a certain amount of money in an account. This becomes the amount of credit that is available, and it can be used to rebuild credit just as any credit card would be.

Filing for bankruptcy is one option for debt relief. A person may feel harassed by creditors, and eventually, legal action could be taken. However, a bankruptcy filing puts an immediate stop to any actions by creditors. A person might file Chapter 7 or Chapter 13 bankruptcy depending on income and whether the person will be able to work out a payment plan that will allow creditors to be paid off in three to five years.

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