How to Build Up Credit After Bankruptcy

Filing for bankruptcy can feel like the end of the world, but it doesn't have to be. It is possible to build up credit after bankruptcy, but it will take time, patience and hard work. If you are in the process of filing for bankruptcy of you've already had your bankruptcy discharged, it's time to start making decisions that will help you build up credit after the bankruptcy. Read on to learn how to do it!

Things You'll Need

• credit reports
• credit monitoring

Instructions

1. 

   Get a copy of all credit reports. You can order these from each credit reporting agency for free one time each year. Once you have these, you will want to check them carefully to make sure that all of your debts that were included in the bankruptcy show as, "discharged in bankruptcy." If you have items that are still showing that a balance is owed, make sure that you dispute each item in each credit report.

2. Take a course on money management. The myth about credit is that it allows you to buy a lot of things that you can't afford. Wise people use credit to their advantage and not simply to purchase items that they can't afford to buy with their own money. One of the best ways to build up credit after bankruptcy is to learn better money management techniques so you don't make the same mistakes again.

3. Sign up for a credit monitoring service. My Fico and Identity Guard are two good services that you can use. You will need to pay a monthly fee, but this will allow you to keep tabs on your credit at all times. Most of these services will also allow you to keep tabs on your FICO score. Knowing this will allow you to track your credit closely and how different things that you do affect it.

4. Wait a year or so to apply for new credit. Unfortunately, you are not the most appealing customer to lenders right now. It's better to wait until you have been out of bankruptcy for a little while before you start asking people to trust you with their money again.

5. Pay everything on time - and that means everything! Just because the electric and phone company don't report each payment you make, doesn't mean that they can't negatively affect your credit score. If you stop paying, they will take you to collections and that will go on your credit score. Pay all bills on time. If you must be late, call them and talk to them about it. Make payment arrangements.

6. Apply for new credit sparingly. It's not easy to wait, but the best way to build up credit after bankruptcy is to do it slowly. Start by getting one credit card, which may have to be secured. If it isn't secured, it will likely have a low limit and that's okay. Use it wisely and pay off your balance each month.

7. Add a car loan or other line of credit. After you have shown that you can manage a credit card or two for a while, add a car loan or another line of credit. Understand that you will likely have to pay a higher interest rate, so take your loan out with this in mind. Instead of buying your dream car, start with a cheaper car that you can pay off quicker. Once you prove that you will pay on time, you will get a lower interest rate the next time.

8. Become a signer on someone's credit card account. This person should have good credit. Suze Orman recommends doing this. You don't even need to have a card, but if you have a family member with good credit who will add you as a signer on their card, their good credit will "rub off" on you.

9. Be patient. Fixing your credit is going to take some time. Make sure that you pay things off on time, all the time. Apply for credit slowly and responsibly. Watch your credit score and address any issues on your report immediately.