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Rebuilding Your Credit after Bankruptcy Obviously, the idea is to file once and get it right so that you never have to file again. Here are some tips on reestablishing your credit rating so that you can make bankruptcy filing truly a financial turning point and a fresh start:

  • Apply for gas credit cards and store cards at businesses where you would normally just pay cash. Pay charges back in full each month or at least pay in a timely manner. Do not carry large balances on the cards. Apply for a secured card where you deposit cash and charge against it. Pay any advances back over a two month period so that they will reflect as positive marks on your credit report. If you are unable to obtain a loan on your own merits, find a relative or friend to cosign for you and pay the loan in a timely manner.

  • Find a mortgage broker or car dealer who holds himself out as "bankruptcy friendly". Attempt to purchase a used car so that you do not get hit with depreciation that occurs during the first two years of a new car purchase. Stay away from payday loans that are at high interest rates and are a "bad credit" trap. Write a letter to each credit reporting agency explaining the circumstances that lead to your filing. You are entitled to include a statement in your credit report explaining why you had to file bankruptcy. If circumstances beyond your control were the cause, this can only help.

  • Write to each credit reporting agency for copies of your credit report. Make sure that all of your pre-petition debts are properly notated as being discharged or paid through your bankruptcy. Make sure that none of your pre-petition debts are still being listed as delinquent, ie. 90 days late, 120 days late etc. If these debts are still being notated incorrectly, you are entitled to write the credit reporting agency and contest each such debt. Open a savings or checking account. Try to deposit 5% of your weekly paycheck into the savings account. Lenders may look at this to determine if you can handle money responsibly.

  • Live within your means. Remember to not unnecessarily increase your debt to income ratio by taking on credit to purchase luxury items that you DO NOT NEED. Your payments on consumer debt should equal no more than 20% of your disposable income after deducting costs for housing and vehicles.

  • Pay your rent and utility bills in a timely manner for at least a year.

  • Apply for a secured credit card, where you deposit money and borrow against it. Do not purchase consumables (food, gas, and other things that you use up within a few days) with the credit card. The idea is that you want to be able to pay off the purchases before the item is used up.

  • Make sure you don't apply for too much credit at once. Numerous inquiries to the credit reporting agencies will negatively impact your credit scores.

  • Since student loans are generally non-dischargeable in a bankruptcy, make sure you make your payment in a timely manner, and if possible, pay extra each month to begin to pay down the principal.

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