Fixing Credit After Bankruptcy

Bankruptcy leaves a seemingly indelible stain on credit histories, making it difficult to land apartments, get jobs, apply for credit cards or obtain a home loan. Setting goals to fix credit after bankruptcy is a good indicator that you're ready to start fresh and avoid financial mistakes from the past. Fixing credit after bankruptcy isn't impossible, but it takes some time and discipline.

Cash Only

Bankruptcy survivors may like the idea of adopting a "cash only" approach to finances because of bad experiences with mismanaged debt. While fiscal conservatism will help you steer clear of excessive debt, paying for everything up front won't do a lot to fix your credit history and score, since it generally takes credit to build credit. Plan to incorporate financial credit management into your budget to start improving the score.

Good Habits

People with good credit scores tend to have habits contributing to regular financial health. Pay bills on time, keep credit balances low and don't apply for too much credit all at once to slowly begin fixing credit. If your busy schedule contributed to frequently late or missed payments, sign up for automatic monthly payments from your checking account; then make sure the account balance is sufficient to cover payments each time. Debtors who missed payments because of lack of money should analyze their budget, striking out luxury or unnecessary items so that there's a small-but-comfortable cushion -- of at least a few hundred dollars -- in the bank that is more than what is required for monthly expenses. Alternately, take on a part-time job or extra work responsibility to nudge up income in order to adequately cover living costs.

Fix Errors

Sometimes credit histories still show accounts as open and overdue when, in fact, accounts have been closed and debts eliminated as part of bankruptcy proceedings. This hurts your credit, since lenders see these as delinquent accounts, according to MSN Money. Contact the credit bureaus -- Equifax, Experian and TransUnion -- and ask that the open accounts be closed and identified as "included in bankruptcy." Wiping these out will help fix your credit after bankruptcy.

Obtain Credit

Take out two kinds of credit to start fixing your credit score: installment loans, such as student loans, car loans or mortgages, and revolving credit, such as a credit card. Using these judiciously and making on-time or in-full payments each month can help repair your credit history. While you may not qualify for an unsecured credit card, secured credit cards may be available to consumers after bankruptcy. Secured credit cards typically have lower balance limits, and you'll have to front the initial available balance at the issuing bank. Make sure that the issuer regularly reports to the credit bureau, or your virtuous on-time monthly payments will go unnoticed.