4 tips for rebuilding your credit after filing for bankruptcy in Texas

People in Texas who have filed for bankruptcy should know which steps to take to rebuild their credit score.

According to NerdWallet, a bankruptcy will stay on someone's credit score for up to 10 years. This, of course, adversely affects the consumer's score. However, rebuilding that score is not impossible and does not have to take years and years. People in Texas who have been through bankruptcy should heed the following advice:

1. Create a budget

A Gallup poll released in 2013 reveals that only 32 percent of Americans have a household budget. This is incredibly low for something so vital to maintaining good financial health.

Everyone - regardless of income or life station - should have a budget that tracks income and regular expenses. This enables people to ensure they have enough money to pay the bills. More importantly, it forces consumers to prioritize how they spend money and highlights where sacrifices may be made in order to save a little money every month.

2. Open a secured credit card

One of the best ways to build credit is to have credit. Someone with a bankruptcy on file may have difficulty securing a traditional credit card. However, banks and other financial institutions offer secured credit cards, which are established by the consumer putting the money for the card up front.

Therefore, someone may obtain a $1,000 secured credit card by first depositing $1,000 into the account. This is a great way to demonstrate to creditors that the consumer responsibly handles charging items.

3. Save money every month

Having a nest egg - even a small one - keeps unexpected costs from driving someone into debt. Ideally, a budget is set to the 50/30/20 rule, which is the following:

  • 50 percent of income goes toward essentials
  • 30 percent goes toward "lifestyle" choices, like cable television and dining out
  • 20 percent is set aside into savings

For many people, reaching 20 percent seems overwhelming and even impossible. If this is the case, they should strive to save as much as possible while still affording the basic necessities.

4. Pay bills in full and on time

Lastly, every bill someone has - from credit card bills to the mortgage to utility bills - should always be paid in the full amount and by the due date. Some institutions allow people to set up an automatic draft that prevents them from missing a due date and a costly late fee. Even one late payment may affect someone's credit score.

In addition to all these steps, people should regularly check their credit scores to make sure there are no mistakes that could be affecting the number. Anyone who has questions about this issue should speak with a bankruptcy law attorney in Texas.