Rebuilding credit after bankruptcy

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Rebuilding credit after bankruptcy can be a frustrating and unthinkable task for consumers. However, it is advised that you start building a new credit history immediately after your bankruptcy has been discharged so you can establish a good credit rating again in as little as one to two years.


Almost anyone can be approved for credit soon after a bankruptcy. Believe it or not, you will be bombarded with unsecured credit card and auto financing offers after a few months of your bankruptcy discharged date. However, these offers will mostly come with annual fees and high interest rates.

The easiest and most important step to rebuilding your credit after bankruptcy is to obtain one or two major credit cards (This is considered revolving credit). The easiest way to accomplish this is to apply for a secured Visa or MasterCard or accept one of the pre approved credit card offers you will receive in the mail. It is critical to show a consistent on-time payment history on your remaining debts and any new open lines of credit.

The next step and a common problem after bankruptcy is that your credit reports still may show several accounts as open and overdue and in fact they were closed and should have been wiped out as part of the bankruptcy. In order to recover your credit, you will need to contact the credit bureaus and insist the marked accounts be properly reported as "included in bankruptcy".

Finally, if you want to restore your credit score as quickly as possible, you will need to obtain a mix of credit. This includes installment and revolving lines of credit (If none currently exist after bankruptcy). Installment lines of credit are student loans, auto loans and mortgages.

A bankruptcy can remain on your credit report for up to 10 years, but its effect on your credit score can start to diminish the day your bankruptcy is discharged if you practice sound credit habits such as paying your bills on time each month, use only a small portion of your available credit and not applying for too much credit.