A Guide to Rebuilding Your Credit After Bankruptcy

Prior to filing bankruptcy, you may have felt like it was the end of the world. The good news is that once you’re bankruptcy is discharged you can begin rebuilding your credit.

This will be difficult at first, but with time you’ll be able to get approved for new credit cards and raise your credit score.

See Where You Stand

If you haven’t done so recently, start by checking your credit history to see where you stand. Having a starting point can help you track your progress as you work to rebuild your credit.

Pull Your Credit Reports and Check Your Credit Score

You can order copies of your credit report and check all of your credit reports. This way, you can confirm that all your accounts are reported accurately or not.

Check your credit scores to mark your starting point. Don’t be discouraged by where your credit score is right now.

It’s normal for credit scores to be low right after bankruptcy. With the right steps, you’ll raise your credit score and be able to qualify for credit cards, loans, and more.

Start Rebuilding Your Credit

Get New Credit

Rebuilding your credit requires you to actually get credit opportunities. You’ll have open, active accounts with positive payment history to start improving your credit score.

Of course, the difficulty of building your credit score is actually getting new accounts. Many creditors and lenders are hesitant to grant accounts to people who have recently filed bankruptcy, but there a options available for you.

A Secured Credit Card

A secured credit card is a type of credit card that helps you rebuild your credit. It’s easier to get a secured credit card after bankruptcy because the security deposit is collateral for the balance you charge. You can get a secured credit card with a deposit as low as $200, depending on the card issuer you choose. A larger security deposit will give you a higher credit limit.

When you’re choosing a secured credit card, make sure you choose one from a reputable company that reports to the major credit bureaus. Beware of credit cards with high fees and interest rates.

Get a Cosigner

If you have a friend or relative who is willing to help you get a credit card, it will improve your chances of getting approved. The cosigner’s good credit history can make up for the fact that you have a bankruptcy on your credit report.

Keep in mind that your credit card usage affects both of your credit, so make all the monthly payments on time.

Become an Authorized User

If someone does not want to get a joint credit card with you, perhaps they will be willing to make you an authorized user on one of their existing credit cards. As an authorized user, you have the privilege of making purchases on the credit cards, and you’re responsible for the payments.

Once you’ve been added, the account history will appear on your credit report and be factored into your credit score. As long as the account has a positive history, it will help improve your credit score.

You don’t have to piggyback on someone else’s credit forever. As your credit score improves and your bankruptcy ages, you’ll be able to qualify for credit on your own. Make sure you’re paying what you’re supposed to, and be sure the payment record is being sent credit bureaus.

Make Safeguards For Yourself

You don’t want to quickly land in debt again, so you need to make sure that you have safeguards in place to protect yourself. Some things,

Establish a Good Credit Record

Getting new credit is only the first step to rebuilding your credit after bankruptcy. Once you have new credit, you must make your monthly payments on time and keep your credit card balance low.

These are the two most important steps for building and rebuilding your credit score.

Charge only a small amount on your credit cards and pay your balance in full each month. Avoid using your credit card any time you can’t afford to pay it off.

Keep Your New Applications to a Minimum

While you do need to get new credit to start rebuilding your credit score, you don’t want to go overboard. Opening new accounts can hurt your credit score and put you at risk of getting back into debt.

Pay Your Bills on Time

Stay on top of all your bills, not just the ones that report to the credit bureaus. Making timely payments is the most important part of your credit score.

If you fall behind on other bills they could also wind up on your credit report as debt collection accounts. There are several ways to stay on top of paying your bills if you are worried you might miss payments.

Avoid Making the Same Mistakes

A good credit score is an essential part of strong finances. Don’t think of bankruptcy as the end of the world, but rather a chance to start over and do things better the second time around.

You can rebuild your credit after bankruptcy by getting new credit and making all your payments on time. If you are cautious, it is likely you won’t run into the same issues that led you to bankruptcy the first time.