Bankruptcy is a legal procedure for individuals or businesses to get out of debt. Filing for bankruptcy in India typically involves two types of proceedings: a Liquidation Proceeding and a Resolution Proceeding. A Liquidation Proceeding is when a company or individual’s assets are sold off to pay creditors, while a Resolution Proceeding involves restructuring the debt to create a repayment plan.
Rebuilding credit after bankruptcy in India can be challenging, but it is possible. Here are some steps you can take to rebuild your credit after bankruptcy:
- Review your credit report
The first step to rebuilding your credit after bankruptcy is to review your credit report. You can get a credit report from any of the four Indian credit bureaus for free – CIBIL, Experian, Equifax, and CRIF High Mark. Review your credit report carefully to ensure all the information is accurate and up-to-date. If you find any errors or discrepancies, you can file a dispute with the credit bureau to correct them.
- Create a budget
The next step in rebuilding your credit after bankruptcy is to create a budget. A budget will help you manage your finances and live within your means. Take a closer look at your at your income and expenses and identify areas where you can trim down costs. Use the extra money to pay off your debts and improve your credit score.
- Get a secured credit card
An effective way to rebuild credit after bankruptcy is to get a secured credit card. A secured credit card necessitates you to make a deposit upfront, which acts as collateral for the credit limit. This type of credit card is more easily approved than an unsecured one and can help you establish a positive credit history.
- Make on-time payments
Making on-time payments is crucial to rebuilding your credit after bankruptcy. Late payments negatively impact your credit score, so making all your payments on time is essential. So, set up automatic payments or reminders to ensure you never miss an EMI payment.
- Apply for a small loan
After establishing a positive credit history with a secured credit card, you can apply for a small loan. A small loan can help you build credit and improve your credit score. Pay the loan back on time to avoid any negative impact on your credit score.
- Avoid applying for too much credit
While it is important to establish credit after bankruptcy, it is also important to avoid applying for too much credit. Each time you apply for credit, the lending firms conduct hard checks on your credit history and it can negatively impact your credit score. Only apply for credit that you need and can afford to pay back.
- Stay patient
- Rebuilding your credit after bankruptcy takes time and patience. It can take several months or years to improve your credit score significantly. Stay committed to your budget, make on-time payments, and avoid applying for too much credit. Over time, your credit score will improve.
In conclusion, rebuilding credit after bankruptcy in India is possible, but with time and effort. Review your credit report, create a budget, get a secured credit card, make on-time payments, apply for a small loan, avoid applying for too much credit, and stay patient. With these steps, you can establish a positive credit history and improve your credit score. You can also consult
credit experts and financial planners from ApnaPaisa to rebuild your credit after bankruptcy.