How Do I Build My Credit After a Bankruptcy?


After filing for bankruptcy, many people think they must live on a strictly cash basis and don’t realize credit is available to them. There is no need to build up massive credit debt to repair a damaged credit rating.

Even small loans and small purchases will build credit effectively as long as all payments are made in a timely way and all terms of the loan or account are followed carefully.

Filing for personal bankruptcy is sometimes necessary when financial problems are overwhelming and it is for those times that bankruptcy laws exist. What is seldom mentioned is the emotional toll that accompanies a bankruptcy.

Bankruptcy Reasons

The two most common reasons given for bankruptcy are huge medical expenses and credit card debt. In the recent economic downturn more and more consumers have been filing personal Chapter 7 bankruptcy to escape crushing debt.

It is no longer true that only consumers living beyond their means and spending much more than they can afford have problems with credit card debt.

Credit lenders have often doubled or even tripled interest rates on consumer accounts if the consumer had a late payment on an account not related to the credit card company.

Faced with payments they can no longer pay, consumers are turning to protection from the bankruptcy court. Many feel they will never regain their previous good credit standing are surprised to learn how difficult daily life can be without a credit card.

The Standard and Secured Credit Cards

You may be able to acquire a standard credit card with a low limit based on your past association with your bank. If not, you may be able to acquire a secured card using part of your savings to provide the security.

You would not need to open a secured account but your bank would make a portion of your savings account the required cash security for the card.

Many standard credit lenders issue secured credit accounts that carry the recognized Visa or MasterCard logo and report monthly to the credit rating agencies.

The reporting is an important element for you as the goal is to rebuild credit, not just to have a credit card to use. You will find many offers online for secured credit cards and should read the terms of the agreement carefully.

After bankruptcy, you are not in a position to bargain for better interest or any reward programs but you can be certain to only sign up for cards from lenders that report to credit bureaus.

You may also find offers that will convert to a standard unsecured account at some point in the future after you have made payments on time for two years or so.

Build Credit Quickly

Well, you cannot rebuild credit quickly but it won’t take as long as you might think to reach a level where you will be approved for a credit card at a department store and can qualify for a gas company card.

Line by line and payment by payment you can not only correct the damage done to your credit rating by bankruptcy but can learn to avoid making the same mistakes in the future.