How to Improve Credit fter Bankruptcy

If you’ve filed for bankruptcy, it’s important that you understand how to improve your credit after the bankruptcy has been discharged. Improving your credit is an important step if you hope to qualify for financing in the future. The first step to improving your credit after bankruptcy is establishing a budget, and sticking to it.

Record exactly how much you spend each month on various categories such as rent/mortgage, food, utilities and other basic bills. Also include variable expenses such as clothing, leisure and hobby expenses, and gas/travel. Establish a predetermined spending amount for each category and stick to it. Learn to control your expenses through discipline, tracking, and budgeting.

Consider opening a secured credit card, which will also help you rebuild your credit score. Secured credit cards work very similarly to debit cards. You cannot spend more than you have on a secured card. This should help with budgeting, and will prevent you from spending more than you have. Keep your total balance on the secured credit card to 20% (or less) of your maximum credit line.

Six months after your bankruptcy, consider opening a new credit line (in addition to your secured credit card). By this time, you may be able to qualify for an unsecured card (though it will probably have a very high interest rate). Use this card along with your secured credit card. Keep all your balances small and make consistent, on-time monthly payments. In another six months, consider opening a third line of credit by applying for another unsecured credit card. In 24-36 months, your credit scores should be increasing and you should have more available credit options.