Rebuilding Credit after Bankruptcy


By Bankruptcy Info Blog | August 20, 2014 at 01:02 PM EDT | No Comments

 1)  REPAIR: Dispute any errors on your credit report.

What should your credit report look like after bankruptcy? The accounts on your credit report don’t simply disappear from the report. For all debts discharged in bankruptcy, the account entry should show (1) zero balance due, (2) the comments or status section should state “included in bankruptcy,” and (3) no late payments stated after the date you filed bankruptcy. However, negative entries that predate your bankruptcy stay on your report. Obtain a free copy of your credit report from about 2 months after your bankruptcy discharge. If any entry is not reported as stated above, you need to dispute the account with the Credit Reporting Agencies.  Don’t contact the creditor directly.  Each agency’s website contains instructions on disputing entries.  The best way to do so is in writing.  The dispute process takes about 30-45 days and most of the time it will resolve the issue.

2)  REBUILD: Obtain new credit.

Credit cards have the greatest impact on your credit score so focus on obtaining ONE new credit card as soon as possible. Try to get an unsecured card with no annual fee, but if you can only get a secured card that’s okay too.  Note:  secured credit cards are not prepaid debit cards.  Prepaid debit cards are not reported to the credit agencies. Also, make sure the card you end up choosing does report to the credit reporting agencies.  Some small credit union cards don’t report. These cards initially will have low available balances.  Charge no more than 10% of the available balance per month and pay it off each month ON TIME. For example, if the available balance is $1,000, charge no more than $100 per month.  DO NOT PAY LATE AND DO NOT SKIP PAYMENTS!!  Your goal is eventually to have three credit cards so you immediately want to start with whatever card you can get.  For the other two cards, wait until your credit recovers to the point that you can get unsecured, non-subprime credit cards from major providers.


3)  RELAX:  Time heals all wounds.

Bankruptcy is not a 10 year death sentence to your credit. As negative items age the entries have less impact on your credit score. Although a bankruptcy will be on your credit report for 10 years it only meaningfully impacts your credit for about 3 years. For example, current FHA mortgage lending guidelines will not disqualify a borrower for filing a bankruptcy after two years from the bankruptcy discharge.  The natural passage of time should heal your credit.

4)  Additional DONT’s

DON’T pay for credit monitoring. DON’T pay for a credit repair service. Most are scams and the ones that aren’t do what you can do easily yourself. DON’T listen to anyone that says he/she can delete your bankruptcy from your credit report. Your credit report is allowed to contain true information about you. (However, inside tip, if the entry about your bankruptcy has an error, e.g. wrong date, you can dispute it and sometimes the bankruptcy gets removed).  DON’T reaffirm a debt in your bankruptcy for the sake of credit reporting. Your credit will recover after filing a bankruptcy without reaffirming needless debts.

5)  Additional DO’s

DO sign up for free credit monitoring. www. only allows a free credit report per year. Depending on how bad your credit was prior to bankruptcy, the repair phase can take a while and even if you fix an item, it can reappear. So, you will want to monitor your credit for about a year after bankruptcy.  DO consider paying cash and putting off purchases until you can afford to pay for them.  The credit you rack up today affects your life tomorrow.

Additional Resources:

To access your credit report for free, visit  The credit reporting agencies:  and  Free Credit Monitoring: (Credit Karma uses your information to make offers to you).

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