How to Establish Credit After Bankruptcy

The most detrimental thing you can do to your credit is file for bankruptcy.  In fact, your credit report will reflect the bankruptcy for at least for the next 7-10 years.  Often times, however, bankruptcy is the only option you have to square your finances, so ironically, you’re hurting your credit, to save it later.

The beauty about your credit is that nothing is “forever”.  Even though you’ve just filed a credit death sentence, with a little hard work and a lot of patience, you can have your credit score back on the mend in no time.

Knowing that you can rebuild your credit is nice but actions speak louder than words.  After filing bankruptcy, you’re first priority should be making sure that your current debts, the ones that got you into this mess, are squared away. Bankruptcy no longer discharges all of your debt (in most cases), so you’re still on the hook for part of your bills.  Step one is setting up payment plans and saving enough from your income to make sure you don’t miss a single payment. After you’ve built a solid foundation of consistent payments underneath you, it’s time to seek credit.  Here are a few ways in which you’re credit score can slowly begin to rise.

Check Your Credit Report

Creditors use credit reports to check your financial responsibility before extending you credit.  It’s important to make sure that the information they see is 100% accurate as often times with bankruptcy filings, things are not always reported as they should be.  One common mistake that may appear on your credit report after filing bankruptcy is that the accounts negotiated during bankruptcy court are not updated.  This means that instead of your score dropping because of bankruptcy, it will also drop because your accounts will continue to show as delinquent.  Make sure every account that belongs under the bankruptcy umbrella finds it’s way there in your credit report.  This will allow other current, positive accounts to begin helping you out.

Checking your credit report is simple.  You can get your report for free  at If you also want your credit score,  you should visit, where you’ll receive credit scores from the three major credit bureaus during your 7-day free trial.  Take down all of your creditor’s contact information, call them ASAP and request that the information be updated to reflect the details of your bankruptcy.  Make sure that at least once every six months thereafter, you check-in on your credit report to make sure there are no errors and to track your future progress.

Acquire a Secured Credit Card

Obtaining an unsecured  credit card is nearly impossible after declaring bankruptcy, so your next best option is to apply for a secured credit card.  Good secured cards will report your payments to the three major credit bureaus.  While there can be an annual fee for these cards, the long term benefits of building your credit are well worth it.  Secured cards require the set-up of a savings account that’s attached to your card.  The amount you deposit into the savings account determines the credit limit you have.  Apart from the savings account, the card acts like any other credit card.  Should you fall behind on payments, the creditor will simply draw from the savings account and reduce your overall limit to the new balance.  There are hundreds of available secured cards but only a couple of quality ones.

Apply For an Installment Loan

The most difficult of the suggestions made here today, obtaining an installment loan to rebuild your credit can be tricky because of your bankruptcy past.  The funds you acquire should be used for nothing other than an interest bearing account, preferably a CD so that you can continue to pay the loan on time.  The interest you receive from the CD will defer the loss on the interest you are paying for the installment loan and depending on the term of the loan, you should sign up for a CD of similar length.  When the monthly payments are due, try to pay back more than the minimum, as this will help with your credit score as well as lower the interest you pay back over the entire course of the loan.

CD interest rates are fairly low right now but that also means that the interest rate on your loan should also be low.  Signing up for a CD is a fairly painless process and if you visit Ally Bank or Discover Bank, you can find a long CD rate between 2 and 3 percent.

Finding credit after bankruptcy is something that anyone can do, you just need to know where to look. The list above shows a few strategies in how to establish your credit after you have declared bankruptcy.  Each idea individually will not raise your credit score much in the short term but remaining financially sound over the next 5-10 years without falling behind on your payments will steadily improve and eventually restore your credit report and score.

Topics: Credit

21 Responses to “How to Establish Credit After Bankruptcy”

  1. Well said, people not checking their credit report after bankruptcy is one factor that is chiefly responsible for people not being able to get credit after bankruptcy. And also, being honest with your financial dealings, one way to show this is by making prompt payment on your smaller credit lines. Thanks for sharing.

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  3. Jonathan Tollefson

    How about getting on a budget and stop spending money you don’t have?? If you go bankrupt, it might be a good idea to start looking at yourself and why you got in this mess in the first place. Was it because you took out a loan that you could not afford, was it because you over spent and maxed out your credit cards, or is it because you are just not good with your money? Take a look in the mirror and make a change so you never have to be in this position again, or just keep borrowing more money that you have and blame it on something else when it happens again.

    • Are you joking?

      Why do you think that Bankrupcy is always a result of unsecured debt? Or spending more than you have? How about a turn in health, an accident, a bad market, a law suit, bad investing, theft, divorce?

    • David B

      Hey John??
      What about people who have had? a good paying Job…and through no fault or their own lost that income? Divorce,death,illness,etc.
      I believe you should have prefaced your diatribe with a qualifying sentence. Not everyone who runs into issues? are along the lines of which you speak!

    • Shame on those who assume people who take bankruptcy are all irresponsible lay abouts! I certainly hope you never have a serious health issue that is not covered by insurance, a lob loss or other significant financial disaster – you might possibly have to EAT YOUR WORDS.
      “Walk a mile another man’s moccasins before you criticize him”

    • LOL, WOW John, seems like you have only one idea of Bankrupcy. I was making 85K a year and got cancer and was unable to work. Fine now after treatment. NEVER been late on ANYTHING and 65K in savings. That was depleted and just got back to work at $10 and Hour. YES I need Bankrupcy but not because of my spending. Went from a 828 score to a 633, Not always because of poor habits

    • Did you ever hear of divorce, 16 surgeries and a contractor that tried to rip you off by trying to take your money without doing the work. Know your facts before putting thy foot in thy mouth.

  4. Very good advice, even for those who haven’t filed for bankruptcy but don’t have good credit scores for whatever reason. It should be noted that even after a bankruptcy has been cleared for several years and your credit scores are good, any “post bankruptcy” late payment or collection will be scrutinized very closely by lenders during the approval process. They want to make sure you are not heading toward bankruptcy again.

  5. I’m a personal look at bankruptcy, it’s not all because of over spending. I’m been one of the very unlucky people that has gone thru a divorce, while I had paid everything that was awarded to me within my divorce my ex husband didn’t. I didn’t know at the time that the creditor’s could still come after me if it was in the divorce decree. Lets just say my ex husband didn’t pay anything and all the creditor had started suing me and advising they were going to garnish my wages. I was forced into bankruptcy as no control of my own. So Jon you need to rethink you post.

  6. Jonathon,

    You made some valid points, but most people do not take the decision to file bankruptcy lightly. I was unemployed for a long period after working for 30+ years. I did everything I could to stay afloat, but in the end, the only option was to file. The one thing I believe was done different than others, was that I did not wait until my cards were 30+ days late. As soon as the inability to pay was reached, bankruptcy was filed. As I said, this is not an easy decision to make, but non the less necessary.

    • Penny Thompson

      How are you doing now? I just filed a chapter 13 for the same reason, I dont want this to render me too bad and Im desprate at this point to rebuild. If you can, please share what you have done to rebuild? While I was unemployed my car was threatened, being a single parent and this my only source of transportation I had no other choice. I would like to buy a house once this is all over so, I’d really like to rebuild.

  7. Ohh John I use to pass self righteous judgments just like that till I lost a great job due to a company closing its doors. And yes your point is valid but not every BK is part of that validation. This thing in the world is only going to get darker before we realize it’s not condemning advice that helps people, but it’s what you do after BK that shows true character.

  8. This is a great post and the advice is quite sound, having Tax Attorneys in our office who advice clients on what to do to avoid tax problems which could lead to a bankruptcy its always quite hard to make a rebound but secure cards and installment loans are always an excellent start.

  9. wow Jonathan Tollefson……

    you know I’m only 22 and my credit was decent. I had a few credit cards and always payed on time and never borrowed money. Then the stove in my apartment blew up, the sprinklers came on and nobody was notified until I was able to call 911 because our complex’s fire alarms never went off. Because of that, by the time the fire dpt could turn off the water, the flooding had reached the 1st floor, (I live on the 3rd). The complex blamed me saying I never called in a workorder on the stove when I did, so they said I would have to pay for the damages in all 3 apartments. THATS why I had to file bankruptsy. I don’t even have enough to afford an attorney, im only 22! So next time you say something so rude why don’t you think about the different reasons why people have to file.

  10. Thanks for sharing all of these great tips! It is awesome to see that there are so many great deals around. I’m in the middle of planning my honeymoon, so this will be perfect for me. Hopefully I can find a hotel that will have a room for less than $100 per night.

  11. Thanks for sharing all of these tips! I really like this idea that you can build your credit so quickly after declaring bankruptcy. It really is important to have a good credit score. If you don’t then you may not even be able to buy a house or a car!

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