Not only is going through the bankruptcy process itself very difficult, but many people who file bankruptcy fear that their credit will never recover. While it's true the record of the bankruptcy can stay on your credit report for up to ten years, there are steps you can take to start rebuilding your credit and get your score up after bankruptcy.
Step 1
Learn from your mistakes. Be honest with yourself about the reasons you filed for bankruptcy, and make sure the factors that contributed to your bankruptcy are resolved.
Step 2
Stay current on all your payments. If you have any loans that were reaffirmed in the bankruptcy process, make sure that you pay each monthly bill on time. Making these payments consistently on time is a sure-fire way to raise your credit score.
Step 3
Get new credit. Although it is ideal to have both installment loans and revolving credit card lines, you may want to consider getting a secured credit card if you are declined for everything else, suggests Liz Pulliam Weston, a personal finance columnist for MSN Money. Regardless of whether you get a secured credit card, traditional credit card or installment loan, making on-time payments on new lines of credit will show your responsibility and will slowly start to rebuild your credit score. However, this should only be done if you are absolutely confident you will be able to pay off the card and will not fall back into the debt trap that contributed to your filing bankruptcy in the first place. Weston suggests only using 30 percent of your available credit limits and even keeping it as low as 10 percent if possible. The lower your debt-to-limit ratio, the better your score will be.
Step 4
Clear your credit report. Mistakes on credit reports are common and can make your credit score worse than what it actually is, particularly after filing a bankruptcy. Bankruptcy should close all accounts, but sometimes accounts are mistakenly left as open or past due. Make sure that all your accounts are being reported properly, and dispute any mistakes you find by writing to the credit bureau or using the online dispute form found on the credit bureau's website.
Step 5
Consider piggy-backing on someone else's good credit score. This is a bit risky for both parties involved, because if either of you doesn't pay what you are supposed to, the other person's credit score will take a hit. However, if you have a family member or friend you trust and who trusts you back, opening a joint line of credit or being added as an authorized user to one of their credit lines may have a positive effect on your credit score, suggests the NYC Department of Consumer Affairs.
Tips and Warnings
- You can get free copies of your credit report from AnnualCreditReport.com. This is a joint project between the three major credit bureaus and the U.S. government, and they provide one free credit report from each of the three credit bureaus every 12 months. This can be a great, free way to keep an eye on your credit report.
- After filing bankruptcy, you may be contacted by several companies offering to fix or rebuild your credit for you. While this may sound tempting, you should know that these companies are trying to profit off your misfortune and will do nothing that you can't do yourself for free.
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