Although bankruptcy may seem like a shameful and humiliating process to go through, it means you get to start over. You have a clean slate to work with.
Depending on the type of bankruptcy, you may have seven to 10 years before it leaves your credit. In the meantime, here are three ways to begin rebuilding your credit.
1. Learn and practice good credit habits
You never want to put yourself in the position again of having the government bail you out. Work on developing healthy financial habits, such as:
- Making consistent, on-time payments
- Keeping balances low
- Keeping utilization low
- Building an emergency fund so that you do not have to use credit
2. Get a secured credit card
Credit card companies are hesitant to give credit to anyone with a bankruptcy on their credit report. The best way to build your credit may be to apply for a secured credit card. A secured card requires a refundable security deposit. These cards may have high-interest rates.
3. Keep track of your credit score
The bankruptcy will show on your credit report, and it will stay there until it is time to drop off. Do not let this discourage you. As you gain good credit, you may see your score increase.
Check your reports monthly. Although the bankruptcy discharged accounts, something may turn up that does not belong. Report anything that is incorrect to the credit reporting agency.
Rebuilding credit is a lesson in patience. Seeing your score slowly rise may give you the incentive to continue practicing good credit habits.