How to Repair Your Credit after a Bankruptcy

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Editor’s Note: This is a guest post by Deborah Dera The state of today’s economy has been less than friendly to many. A number of honest, hard working people have found themselves struggling on a financial level and despite their best efforts have turned to bankruptcy in an attempt to gain a fresh financial start. The good news is that while your credit score may have taken a hit you can take steps to repair your credit after you receive your discharge.

Budget Responsibly Your bankruptcy filing will show up on your credit report for up to 10 years. This does not, however, mean that you will not be able to obtain any type of credit at all. Take some time to sit down and work out a budget that will allow you to reestablish some type of credit without going into debt. Use the cash you’ve set aside in your budget to take out a small loan, open a store credit card, or to do something that will allow you to make monthly payments – on time – so that they are reported to the credit bureaus.

Create an Emergency Fund

There is no telling when the economy will improve. Spend some time stashing some cash in a savings account so that you will have an emergency fund in place for future tough times. Having an emergency fund in place will help you to avoid turning to credit when things get rough.

Review Your Credit Report

Take some time to pull a copy of your credit report and check it for mistakes. Many people who have recently filed for bankruptcy have found that their credit reports show mistakes. The most common mistake is that old creditors show your account as open and past due when they should show as closed because of your bankruptcy filing. You’ll need to contact the credit bureaus directly to have these mistakes corrected.

Open New Credit Accounts

The only way to establish credit is by using credit. The trick is to use your credit responsibly. Open a few small credit accounts with major credit card bureaus (skip the department store cards). Make small purchases, never exceeding 10% of your credit limit, and pay them off in full when the bill arrives in the mail. Paying the bill right away will show good payment habits and will prevent you from having to pay the higher interest rates you’re bound to be subjected to after your bankruptcy.While it may take some time to rebuild your credit score, it is possible. Tread carefully, don’t overuse the lines of credit you are able to establish, and make sure you make every single bill payment you have on time. Before long, you’ll be well on your way to a 720+ credit score and your bankruptcy will be a thing of the past.

Deborah Dera is a professional writer focused on personal finance, bankruptcy, credit repair, and more. She enjoys contributing content to and to other sites dedicated to helping individuals take control of their financial futures.

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