How to Rebuild Your Credit After Bankruptcy

Follow these simple steps to begin a new financial life after filing bankruptcy.

Bankruptcy - How to Rebuild Credit

Apply for a credit card

Try to obtain either a secured or unsecured credit card, and make sure to repay the entire balance each month. Doing this quickly establishes a timely payment history and improves your credit. Do not fall into the trap of obtaining too much credit, and make sure you can pay off the full balance each month. Gas or department store credit cards are good cards to use to rebuild your credit and can help you limit your purchases to necessities that you would normally pay with cash.

Keep your house and car

Reaffirming your mortgage and auto loans helps your credit improve after your bankruptcy is discharged. Timely future payments on large obligations go a long way toward improving your credit. If you don’t own a house or car, purchasing a home or automobile after a bankruptcy also helps your credit as long as you are able to maintain your payments on those items.

Repair your credit

It’s unusual for your credit report to be 100% accurate following a bankruptcy, and some of your debts may not indicate that they were discharged in your bankruptcy. It’s the creditors’ responsibility to update your credit reports to show that your discharged debts have a zero balance, but you obtain the best results if you dispute incorrect items on your credit report yourself. See How to Repair Your Credit.

Open a checking/savings account

Maintaining a checking or saving account shows your creditors that you are successfully managing your finances. Building a relationship with a local bank or credit union may also lead to a loan in the future.


Hopefully after a bankruptcy, you have more disposable income now that your debts are eliminated. Start putting away a percentage of each check into a savings account. This money can be used as a down payment or as collateral for a variety of loans.

Get a co-signer

You are much more likely to get lower interest rates and better loan terms if a family member or close friend is willing to co-sign for you.

Pay on time

Most importantly, make sure to use your fresh start wisely and make all your payments on time every month. Filing bankruptcy gives you a second chance, but it’s much more difficult to improve your credit if you repeatedly fall into financial problems.

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