Declaring bankruptcy is the most serious financial decision you can make. It has long-lasting ramifications and will stay on your credit report for at least 10 years. But bankruptcy doesn't have to be entirely negative. It is created as an option for individuals who are irreversibly in debt. Declaring bankruptcy kills your credit score, but it also gets you out of debt. Once you are free of your debts, there are steps you can take to build back your credit score despite your bankruptcy and recover from this financial burden.
Step 1
Begin paying off your bills monthly. Bankruptcy is not a financial death knell, and a low credit score isn't permanent. You can help build it up by making all payments on time. Your credit report will accrue positive ratings with each payment, and it will be reflected in your score.
Step 2
Obtain a line of credit and use it in moderation. If all of your credit cards were closed out, apply for a secured credit card. These usually come with annual and/or monthly fees, but even those with bankruptcies can obtain them. Make small charges on your card not exceeding 30 percent of the card's total limit. This will be a positive reflection of your fiscal responsibility on your credit report.
Step 3
Apply for an installment loan or make frequent payments on a student loan. Student loans usually aren't absolved by declaring bankruptcy, so you'll still have to pay them. However, this can be a good omen--it gives you a chance to make monthly payments and further prove your responsibility. Make more than the minimum payment whenever possible. If you don't have student loans, find a small installment loan you qualify for and take it out for the sole purpose of paying it back in full and on time.
Step 4
Reduce your spending. This won't have a direct impact on your credit report, but reduced spending will create more expendable income. After a bankruptcy, you need to be putting all the money you can toward your bills, particularly those that have carried over from your bankruptcy. Put your money in savings accounts and credit deposits, where your bank will see your money being saved. Building this relationship with your bank will make your banker more likely to help when you need a loan or line of credit, and these credit opportunities are the key to improving your credit report.
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