Rebuilding Your Credit

Reestablishing your credit after bankruptcy is going to take time – so you need to start thinking about your financial future now!

Be patient!

Time heals all wounds with credit ratings.  By applying for credit, using it responsibly, and regularly checking that your credit report is correct, you should be able to rebuild your credit rating much sooner than you would think!

Step 1:         Apply for credit.  Don’t assume that filing bankruptcy destroyed your ability to get new credit.  Plenty of lenders are willing to take a risk on you since your “fresh financial start” has erased the previous strains on your income.

Start Small.  Apply for a gas card or store card.  They usually come with a small credit limit and relatively high interest rate, but you have to start somewhere.

Use Responsibly.  Use the card on a regular basis, charging only small amounts that you know you can pay off in full each month or in a relatively short period of time.  This shows you can handle credit responsibly.

Step 2:      Build up over time.   After a few months, apply for a sub-prime Visa or Mastercard offered by banks that cater to post-bankruptcy consumers.  You can expect high interest rates, possibly an annual fee, and the credit limit will probably still be low.  But you are rebuilding, and this is temporary.  Make sure to use the card responsibly:  charge regularly in small amounts that you pay off in full each month or in a short period of time.

Upgrade.  After you have responsibly used your other cards for about a year, apply for a more conventional card with better terms.

Step 3:        Check your credit report.  It’s impossible to rebuild your credit rating if your bankruptcy and all of the accounts included in it are not shown correctly on your credit report.  Check your report regularly to make sure everything is reported right.  Turn this card over for more information on how your credit should look after bankruptcy.