After you file for bankruptcy, it can be overwhelming to know what steps to take next. Bankruptcy can provide debt relief, but what do you do afterward? How do you build your credit after filing for bankruptcy? Depending on what kind of bankruptcy you file, it can remain on your credit report for up to ten years. This can jeopardize your ability to get financing for cars and homes, so it’s important to know the steps you can take to improve circumstances in the future.


One of the best ways to build and maintain good credit is to never miss a payment. That’s because just one late payment can negatively affect your credit. When late payments add up over time, your credit can quickly take a hit. Especially after bankruptcy, it’s important to diligently keep up with your debt payments. Even if you just pay the minimum, it still shows up as a payment. As you probably know, it’s a lot harder to build credit than it is to negatively affect it.


According to a 2019 survey,  nearly 57% of Americans have less than $1000 saved up in case of emergencies. While the coronavirus pandemic has undoubtedly made this more difficult for some Americans, saving money for a rainy day, or for a goal, is so important. For example, saving up gives you funds to fall back on for any debt repayments or a down payment on a home or car. If you have enough money saved up, you might even have enough to pay for some of these things in cash! This can be very helpful in the event that bankruptcy prevents you from having access to reasonable financing terms.


What if you could build your credit without having to take on risky debt? Secured credit cards and loans let you do that. “Credit builder loans” usually work by establishing a payment plan for a specified term based on an amount you provide. (This is another reason to save!). The payments report to the credit bureau like any other loan, so it helps establish a pattern of repayment history. Since these loans are secured by your own funds, you’re likely to be approved even with a bankruptcy in your credit report. Secured credit cards work in a similar way by using your own funds as a balance to borrow against.


Finally, a simple way to build your credit is to know what’s on it. Make it a habit to check your credit at least once per year, ideally more than that. Some reputable websites let you download your credit report for free for all three credit bureaus either all at once or one at a time per calendar year. Keeping an eye on your credit gives you the opportunity to see how your hard work pays off and also alerts you to any potential fraudulent cases quickly.

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