How to Rebuild Credit After Bankrutpcy

Facing financial turmoil, many consumers turn to bankruptcy to get control of their finances. After filing bankruptcy, you might feel like it's impossible to rebuild credit. According to Smart Money, however, the damage to your credit report might not be as bad as you think. Focusing on the areas that make the largest impact on your credit score will get you on track to rebuilding credit.

Instructions

1

Apply for secured credit. According to MSN Money, you have to use credit to build credit. The problem with bankruptcy, however, is lenders may be reluctant to extend credit. A secured credit card, which is offered by most credit card companies, is the solution. You will need to put down a deposit. However, after 18 to 24 months the company may convert the account to an unsecured card.

2

Review your credit report. After bankruptcy is finalized, accounts that show as overdue on your credit report should be labeled as "included in bankruptcy." If this doesn't happen, your credit score can take a hit. If you find accounts that aren't labeled correctly, contact the reporting bureau. Complete a dispute form and include copies of your bankruptcy papers.

3

Use credit cards for the purpose of rebuilding credit. High credit balances have a negative impact on your credit rating. Use your secured credit card to build credit, and pay off the card each month.

4

Secure an installment loan. Credit bureaus like to see consumers using both revolving credit (credit cards or home equity lines) and installment credit (like auto loans or personal loans). Consider applying for a small personal loan and pay back the loan quickly.