How to Establish Credit After a Bankruptcy

A bankruptcy remains on your credit report for up to 10 years, but that does not mean that you will not be able to borrow money at all for those 10 years. You can begin rebuilding your credit the day your bankruptcy goes through, and if you are diligent you will be able to use credit again shortly. Best of all, you don't have to pay a credit repair company or financial adviser to successfully reestablish your credit.

Instructions

1

Make a budget so you are sure to be able to make any remaining debt payments on time every month. Some debts are not discharged in bankruptcy, so if you still have student loans or even a mortgage, you need to keep paying it to avoid further damaging your credit score.

2

Get a free copy of each of your credit reports through the Annual Credit Report website about 40 days after you have filed for bankruptcy.

3

Look over each credit report and check that all of the accounts that were included in your bankruptcy are listed that way on your credit report. They should not be open and past due, but rather closed as part of a bankruptcy.

4

Dispute all errors you find on the credit reports by following the credit bureau's instructions for filing a dispute. Do not proceed until your credit report is accurate.

5

Apply for a secured credit card, which is a credit card that requires a deposit, usually of about $500. Look for a card with a low annual fee and low application fee.

6

Use your credit card regularly, but never allow the balance to exceed 30 percent of your credit limit. Because your limit is so low, you will probably only be able to charge about $100 per month.

7

Pay your secured credit card bill in full every month. This demonstrates financial responsibility and begins putting good information on your credit report.

8

Ask your bank or credit union about taking out an installment loan secured by a Certificate of Deposit (CD). Like with a secured credit card, the bank does not require perfect credit because it holds your deposit as collateral. If you get the loan, put the money in an account and use it to pay the bill on time every month.

9

Check your credit report again after a year has passed. If everything looks good, you could ask your credit card company to refund your deposit and convert your card to an unsecured one. You could also apply for another credit card to continue adding positive credit history.

10

Apply for a mortgage or car loan, if needed, at least two years after you have filed bankruptcy. Pay it for a couple of years and then refinance it for a lower rate after your credit score has improved further.