When you file for bankruptcy, it will remain on your credit report for either seven years for Chapter 13 or ten years for Chapter 7. However, if you’re filing for bankruptcy, your credit report was already in trouble.
The good news is that you can (and should) begin rebuilding your credit gradually after your bankruptcy.
Although it’s counter intuitive, you need to get one or two new credit cards. You can start rebuilding your credit by demonstrating that you can pay your bills on time. Just charge small amounts and don’t carry a balance. Pay the card in full whenever you use it.
Pay your bills on time
Making on-time payments on utility bills, cellphone bills and streaming services will help you improve your credit score. That doesn’t mean signing up for multiple streaming services, but you can have one you use a lot that’s reasonably priced.
Get a secured credit card
Many financial institutions and credit card companies offer secured credit cards specifically for people with credit issues. Typically, you make a deposit that serves as collateral, and then you can charge up to the amount of that deposit on the card. Be sure to make your payments in full and on time and be sure before you select a card that the company will report your use of the card to the three major credit reporting agencies. Once again, do not carry a balance. Use the card and pay it off.
Try a credit-builder loan
This is another way to demonstrate that you can make payments on time without the financial institution risking anything. These loans (sometimes called “Fresh Start” loans) are typically offered by credit unions and other smaller institutions.
You take out a small “loan,” of $1,000 or so. That money is held by the financial institution as you make regular payments toward it. When you’ve paid it off, you get your money back.
Don’t forget to keep an eye on your credit reports as you take these steps to rebuild your credit. It may be depressing at first, but as long as you handle these credit-building options responsibly, you’ll start to see your credit score improve.
If you’re still considering bankruptcy and other options for getting out from under your debt, it’s wise to have legal guidance. This can improve your chances of success.