Unscrupulous companies may promise to fix a credit report after bankruptcy–an enticing proposition for those who want to apply for new lines of credit. However, the Federal Trade Commission and the financial experts at Credit.com warn that these are often scams, as there is no way to quickly fix your credit once a bankruptcy shows up in your files. You can repair your credit after bankruptcy, but this takes time, patience and working with the credit-building methods that are available to you.
Fixing a Credit Report After Bankruptcy
Step 1
Be prepared to wait it out. As the FTC points out, bankruptcy stays on your credit records for 10 years, after which it will no longer appear. Accurate negative information reported to the three major credit bureaus, Experian, Equifax and TransUnion, cannot be removed by you or any credit repair service. It can only be "fixed" with time.
Step 2
Reaffirm a debt that would otherwise be discharged when you filed for bankruptcy. But be very careful before signing an agreement with your creditor, warns the Attorney General's Office of West Virginia. Although keeping the debt can be a benefit to your credit report, it's important to make sure that you can afford to make the payments and you do so in a timely manner. Reaffirming a debt for a home or car may be in your best interest, but reaffirming credit card debt may be a high price to pay for the sake of convenience–it's best to pay cash for a while and apply for a new unsecured credit card once your credit score has improved.
Step 3
Obtain a prepaid credit card instead. The National Foundation for Credit Counseling notes that this is an alternative to reaffirming old credit card debt. To obtain a prepaid or secured credit card, you are required by the card issuer to make a cash deposit that's used as collateral for the debt you incur. Depending on the card issuer, you may be able to charge against 50 to 100 percent of your deposit amount, notes the FTC. But be aware that prepaid credit cards often come with a higher interest rate, as well as additional fees–this is the creditor's way of protecting itself when doing business with high-risk consumers.
Step 4
Continue to pay any debt that was not discharged during a bankruptcy, such as a student loan. Liz Pulliam Weston, financial expert for MSN Money, states that making payments on time and paying them off in full is the best way to fix a credit report after bankruptcy. If possible, pay more than the minimum amount due per month to get the debt paid off.
Tips and Warnings
- Credit.com notes that it's probably best to wait until your credit score has improved before you take out a loan for a home or car after bankruptcy. Prohibitively high interest rates imposed on high-risk consumers can make paying for these high-dollar items burdensome.
Things You'll Need
- Secured credit card (if needed)
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