Having to declare bankruptcy is no joke. This is a life-altering decision that can severely impair your financial life for up to 10 years. However, there are ways you can improve your credit, starting the day after your bankruptcy is filed. It's just a matter of changing your spending habits and taking the proper measures to reestablish your standing as a responsible borrower in the world of credit.
Step 1
Get in touch with the three major credit reporting agencies--Experian, TransUnion and Equifax--and request that any open accounts that are overdue or delinquent be changed to say "included in bankruptcy." It's not perfect, but it will at least show that you are not overdue and it won't continue to hurt your credit.
Step 2
Correct mistakes on your credit report. Closed accounts that are still shown as open, outdated information or even accounts that aren't yours can sometimes show up on a credit report and should be corrected to minimize the damage to your credit score.
Step 3
Change your spending habits by creating a monthly budget and sticking to it. Don't include anything in your budget that you don't absolutely need, and resolve to use credit only for booking hotels, flights or cars. Even then only do so when you have the physical savings to back it up. Maintain an emergency fund of at least $1,000 to cover car repairs and unexpected medical bills.
Step 4
Apply for a secured credit card. These cards will help you establish a credit history, and the creditor won't have to take a huge risk on you. You'll need to pay an upfront fee and annual fees to keep this kind of card open. Make sure the secured credit card you choose reports to the three credit reporting agencies. This will ensure your credit is being restored. In most cases, proper use of a secured card with on-time payments will result in a conversion to a regular credit card within a few years.
Step 5
Pay down any debt you still have. Some loans can't be included in bankruptcy, like student loans, so keep paying those payments on time, and work to pay down the principal, not just the interest. This will boost your credit over time and reestablish you as a responsible borrower.
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