How to Repair Your Credit After Bankruptcy

by Kevin Mulligan

Despite your best intentions you just couldn’t make all the payments work. The creditors wouldn’t work with you and you had to declare bankruptcy.

Bankruptcy is an emotional process and a stressful time. Collection agencies are probably calling you, your workplace, and anywhere else they can find you. But once it is final your dischargeable debts are wiped out, never to return again.

However, once your bankruptcy goes through you’re not done. In fact, you are just starting over.

It’s time to get to work repairing your credit history.

Repair Your Credit Score and History After Bankruptcy

Repair credit after bankruptcy

Repairing your credit after bankruptcy takes time.

Bankruptcy is going to wipe out your credit score. Whether you started with a 750 or a 680, your credit score is going to drop down into the 530 or 540 range. This is an indicator of your credit worthiness to potential creditors: it’s awful.

And that’s fair since you just had a bunch of debt wiped off your slate. If I were a creditor I wouldn’t want to let you borrow money either.

But that’s okay, because over time you can begin to fix your credit score.

Be Patient

The first thing you need to know to repair your credit history is patience.

Again, you just had a bunch of debt wiped out. Potential creditors are going to keep their distance for quite some time and for good reason.

Bankruptcy will fall off your credit history in seven years. Luckily you don’t have to wait that entire time to begin rebuilding your credit. Just know that it will take some time. If you expect anything like a quick fix not only will you be disappointed but you will also be at risk to fall for credit repair scams.

Make Consistent Payments

The best thing you can do for your credit history is to make consistent payments. Maybe all of your debts weren’t discharged because not all debts can be wiped out. Things like student loans can’t be discharged in bankruptcy so making your payments on time is key to improving your credit score.

Even if you don’t have other debt products to make payments on you need to stay on time with all other payments: your rent, your utilities, and other normal household expenses like cell phone bills. These payments may not all be reported to a credit agency, but you don’t want to risk a late payment being reported.

Plus, maintaining good financial habits like making payments on time is a good thing to help you mentally recover from bankruptcy.

Get a Secured Credit Card

While many people who have experienced bankruptcy might be averse to using a credit card again, when used correctly, credit cards can be a great way to rebuild your credit. One of the absolute best things you can do is get a secured credit card. (A normal credit card uses an unsecured line of credit; it may be difficult to be approved for a traditional credit card shortly after filing bankruptcy).

However, a secured credit card company is more likely to approve you for a credit card. Here is how it works:  with a secured credit card, you put down a security deposit and get a credit line of that amount in return. For example you might send the company $500 and in turn they would give you a credit line of $500. That way if you default on that debt they will just keep you deposit.

If you use your secured card for 12 to 24 months without any late payments or other issues they may convert it into an unsecured credit card. Doing this would greatly help your credit history rebuilding efforts.

None of this will happen overnight. Accept that you’ve just had a serious financial setback, learn from your mistakes, and slowly start rebuilding your credit.

Published or updated June 25, 2013.
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{ 2 comments… read them below or add one }

1 Jake @ Common Cents Wealth

These are great tips. I think the biggest one is to have patience. No matter what you do it’s not going to pop back up very fast. There are so many “repair your credit fast” schemes out there that don’t really do anything. People are always looking for an easier way out and there just isn’t with bankruptcy. Just make sure to avoid another one and be patient.


2 KC @ genxfinance

Starting over can feel like the toughest but it can be done. Small, easy, and secure steps for repairing your credit history can do it. Remember to take your time as long as you are making progress, don’t give up.


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