One of the most serious and financially damaging decisions you can make is to declare bankruptcy. While doing so sometimes improves your credit score in the short term, it sets you up for long-term struggles because the bankruptcy will remain on your record for 10 years. Still, there are things you can do to improve your credit rating in spite of your bankruptcy. The key is taking advantage of variable factors comprising your credit score.
Step 1
Pay all your bills in full monthly. On-time payments are registered on your credit reports as positive listings. Payment history accounts for roughly 35 percent of your total credit score, and the more recent the listing, the more significant it is. By making frequent on-time payments, you will be able to watch your credit rating slowly but steadily climb.
Step 2
Obtain copies of your credit report from the three main bureaus (Equifax, Experian and TransUnion), and go over all the listings on each report to make sure they are accurate. Listings are occasionally posted to a credit report with errors on them, and sometimes they appear when they are not valid. Mark any questionable listings to investigate them.
Step 3
Call the creditors with whom you have negative listings showing up on your credit report. Ask them to provide proof the listing is valid, to amend any errors or to remove the listing if it is invalid.
Step 4
Arrange a payment plan with the court (if you have filed for Chapter 13 bankruptcy) and make on-time payments with it. Failure to do so could impact your credit score, and it could also put you at risk for jail.
Step 5
Write a letter to the credit bureaus explaining your bankruptcy if you do not think it is an accurate reflection of your financial risk to a creditor. Many people do this when they suffer a bankruptcy as the result of unemployment or other unforeseen circumstances such as expensive medical bills not covered by insurance. This will help creditors determine your creditworthiness, and it could get you approved for a loan you otherwise might have been rejected for.
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