Credit Repair and Bankruptcy

Each year, millions of consumers are forced to file bankruptcy because they have more debt than they can afford. Though bankruptcy provides relief from overwhelming debt, it leaves a devastating effect on your credit. Chapter 13 “repayment” bankruptcy remains on your credit report for up to 7 years from the date you filed while Chapter 7 bankruptcy will stay on your credit report for 10 years.

Bankruptcy is one of the worst things that can happen to your credit making it hard and sometimes impossible to get new credit cards and loans, especially in the few years right after you file bankruptcy. Just like any other serious financial blunder, you can repair your credit after bankruptcy and your creditworthiness back.

Bankruptcy and Your Credit Report

Start bankruptcy credit repair by making sure all accounts included in bankruptcy are reported correctly on your credit report. Debts that have been discharged in bankruptcy should report a $0 balance and indicate that the account was in bankruptcy. If that isn’t the case, you can submit a dispute to the credit bureau along with your bankruptcy discharge papers.

Once you’ve made sure that everything is reported correctly on your credit report, you should start rebuilding your credit. You can do this by opening up a new credit card, making small charges on it monthly, and paying the bill in full each month. Naturally, you’ll have some trouble getting a credit card directly after your bankruptcy, but there are alternatives.

Getting Credit After Bankruptcy

First, you can repair your credit after bankruptcy by getting a secured credit card. This is a credit card that lets you make a deposit to secure a credit limit on the card. If you default on the credit card, the deposit is used for payment. Secured credit cards are often granted to people with bad credit histories. Make sure the credit card you choose reports your payments to the credit bureaus. That way, your timely payments will be reflected in your credit score.

Another option for opening up a credit card is through the bank that you have your savings or checking account with. If you’ve kept your account in good standing, no overdrafts, and your bank offers a credit card, you have a good chance of getting approved. Talk with the bank manager rather than putting in an automatic application. That way, you can explain your circumstances to the manager and improve your chances of getting a credit card.

The key to credit repair after bankruptcy is proving that you have good credit management skills. You can do that by getting new credit and using it wisely.