How to Go About Rebuilding Credit Post-bankruptcy

ADVERTISING DISCLOSURE

ADVERTISING DISCLOSURE:
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from most credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » Research » Guides » Building Credit History » How to Go About Rebuilding Credit Post-bankruptcy

How to Go About Rebuilding Credit Post-bankruptcy


Updated: December 26, 2012

The content is accurate at the time of publication and is subject to change.
Approximately one-and-a-half million Americans declared bankruptcy in the year 2010, and for every single one of them filing was likely a tough decision. Surviving bankruptcy may seem like a grim prospect, but as long as you keep your finances on track afterwards, the more time that passes means the less negatively the bankruptcy will impact your credit history and your ability to qualify for things like loans, mortgages and credit cards. Many people filed bankruptcy in recent years who never imagined they would ever be forced to make such a seriously consequential financial decision. This is a result of the recent recession and country-wide economic downturn that has had an effect upon millions of households throughout America. There’s no doubt about it: declaring bankruptcy will definitely have a negative impact upon your credit score. It can, in fact, be quite substantial. A FICO score can tumble as much as 200 points upon a bankruptcy filing. The bankruptcy blemish will stay upon your report for as long as seven to ten years, but you can begin taking measures to improve your credit situation as soon as 12 months after you file. Here is what you can do to slowly begin to reverse the damage: Be diligent about meeting your remaining financial obligations. Bankruptcy does not wipe your debt slate completely clean. Student loans, child support and often time mortgages will likely not be affected by your filing. If you make a concerted effort to pay these and whatever other outstanding bills you have on time, your credit will eventually receive a little boost from your good behavior. Also, one of the three big credit scoring agencies, Experian, announced recently that it will begin including an individual’s rental history in their credit profile, which means that if you are a reliable renter you can soon look forward to receiving the perk of a bump in your credit score as a reward for paying your landlord on time every month. However, until all leasing companies, management companies and individual landlords are equipped to report payments only people who rent from a midsized or large rental company can currently take advantage of this change. Opt to carry a secured credit card. Secured credit cards are offered to consumers with a poor credit rating and are designed to offset a lender’s risk by requiring a deposit from the applicant which, in turn, functions as the credit line on the account. The best way to go about obtaining a secured credit card is to apply for one through a local credit union or bank. It’s important that the card issuer reports your payments to the credit bureaus in order to get some positive activity added to your credit report. One thing to watch out for with secured credit cards is high fees – shop around until you find one without them. Look into what unsecured cards are available for you to carry. While it may seem tempting post-bankruptcy to give up on using credit cards altogether, you need to build up your credit again and an unsecured credit card is one of the best, quickest ways to do so. Also consider applying for a gas card or a store credit card because they tend to be among the easiest line of credit to qualify for. And although they tend to carry high APR’s, as long as you only use it for occasional charges and pay off your balances immediately you won’t get into any debt trouble. As soon as you have demonstrated to the lender that you are capable of using credit responsibly and making all of your payments on time, you can request a lower interest rate or apply for a different card altogether. Keep an eye on your credit report for mistakes. You should vigilantly monitor your credit report after you declare bankruptcy so you can keep an eye out for errors and correct them. After a severe credit–bruising ordeal such as bankruptcy you can’t afford to have any unnecessary hits to your score, so it is even more important than ever to review your report on a regular basis.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
Add to Favorites:
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.

Related Research:

Autumn 2018: Best Rewards Credit Cards for Thanksgiving Shopping

Autumn 2018: Best Rewards Credit Cards for Thanksgiving Shopping

Posted: November 8, 2018

Thanksgiving is coming, and whether you are hosting a meal or coming as a guest, your spendings are going to accumulate faster than you can notice. A holiday feast is a costly matter – each year Americans spend around $50 on a Thanksgiving ... Continue reading
The Best Credit Card for Earning Cash: Discover it® Cash Back

The Best Credit Card for Earning Cash: Discover it® Cash Back

Posted: November 2, 2018

You’ll have hundreds of dollars in your pocket in no time because you’ll earn money back on every purchase you make with this card. There are no restrictions on the amount of cash back you can get, and Discover even matches every penny you ... Continue reading
Top 5 Cards for Travel from Our Partners: Autumn 2018 – Expert’s Choice

Top 5 Cards for Travel from Our Partners: Autumn 2018 – Expert’s Choice

Posted: October 10, 2018

Nights are drawing out, the wind is colder every day and you already feel the lightest breath of winter on your face - autumn is here. Holidays are over, kids are back to school and all you are left with are hefty holiday bills that you ... Continue reading
You've successfully subscribed!

Please specify the following:All these fields are optional

Your Credit History
Themes you are interested in:

By providing this information you help us make our news letters more useful and informative. Thank you!