3 Steps to Rebuilding Your Credit After Bankruptcy
When you file for bankruptcy, you're going to have a mark on your credit history that could last for up to a decade. That means repairing your credit so you can borrow, and do so at a reasonable rate, is going to take time.
It is likely to be slow going at first. The opportunity to get credit immediately after a bankruptcy isn't going to be great. You're faced with having a blemish on your record that lenders don't want to see, so it's on you to demonstrate -- over time -- that you are able to manage your money and pay your bills on time.
New Start with a Secured Card
In order to make that demonstration, you might have to get a secured credit card to be able to establish a payment history. That means putting money in an account in advance that would serve as your line of credit. Demonstrating responsible use of the account is one step in the repair of your credit. It likely will lead you to more traditional lending offers. Paying off balances in full before the monthly due dates will help boost your credit standing.
Pay Bills On-Time
From the time your bankruptcy is discharged you must stay on top of your bills. You don't want late payments to be noted in your credit history. You need to show that you take your financial obligations seriously and that you're being responsible with paying your bills.
Check Your Credit History
Another step, and this one doesn't cost a thing, is to regularly check your credit history. You can get one report a year for free from each of the three largest credit reporting agencies -- Experian, TransUnion and Equifax -- by ordering them from the official site AnnualCreditReport.com. You need to make sure that everything on the reports is accurate, so you can quickly request corrections to any errors. If you're working hard to show you're on a better path, it's important to not let a mistake get in your way.
In addition to making sure your payment history is solid, as you're able to establish credit, consider leaving open lines of credit that you aren't using -- and try not to be tempted to use more than you can handle. The lower the percentage of available credit you use, the better it is for your credit score. So, ditching credit cards altogether, while tempting, will not benefit your credit history or credit score.
Ultimately, patience and responsibility will benefit you in the long-haul and help rebuild your credit history to one that will put you in a much better position than you were in when you filed for bankruptcy.