Rebuilding Credit After a Bankruptcy Filing

Tax Professionals Resource
September 13, 2012 — 1,083 views  
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If you have recently discharged your debts through bankruptcy, you may be feeling a mix of emotions. You may feel relief at your new debt-free status, while at the same time feeling anxiety about the future. These feelings are common among people who have recently been through a bankruptcy. Getting a fresh start on your financial future can be overwhelming, but it is the first step on the road to good credit. 

Starting Over

For many people, a bankruptcy means a drastic drop in credit score. For others, it can mean an increase in score if the debts were significant. Whatever your new score may be, it represents a fresh start and numerous opportunities to raise it to a higher level. The first step in starting over is to determine what factors lead up to the need to file personal bankruptcy. Unexpected expenses, inexperience with handling finances or a job loss are all factors that can lead up to bankruptcy. Before your attempt to get any new credit, deal with these issues first. 

Get New Credit

After a bankruptcy it is important to establish new credit. Many people shy away from getting new credit after a bankruptcy out of fear that they will get into the same financial problems again. This is a mistake. The two years following your bankruptcy are critical in rebuilding credit. Start off small with a low credit limit and gradually work your way up to higher credit limits. Pay each bill on time and your score will skyrocket. 

Be Patient

You didn't get into debt overnight, and your credit won't be perfect instantly. While you may get many new offers of credit, there will be some lenders who simply won't lend to you. Understand that this is temporary. Over time, your bankruptcy will be less important. If you are building up good credit, soon your new score will override your bankruptcy and you will start to get more offers of credit. In just two years after bankruptcy, with improved credit, you may even qualify for some of the best home loan rates. 

Bankruptcy is not a credit death sentence. For many that are struggling with staggering debt, it can be a fresh start and a life saver. If you are emerging from bankruptcy, take every opportunity to rebuild and restore your credit file and enjoy a healthy financial life. Start rebuilding your credit profile today.

Tax Professionals Resource