August 18, 2021

4 essential tips to rebuild your credit after bankruptcy

Filing for bankruptcy will affect your credit score for seven to ten years, depending on the type of bankruptcy filed. As a result, you may face higher interest rates if you attempt to get a loan or line of credit, but don’t worry. Our experienced team at Siddons Law Firm is here to with a guide that gives you tips and tricks to rebuild your credit after bankruptcy. No matter your situation, it’s never too late to start building towards better financial security.

Strategies to Rebuild Your Credit After Bankruptcy

1. Monitor Your Credit

Keeping a close watch on your credit information is a crucial part of recovering from bankruptcy. After you file, regularly monitor your discharged accounts, make sure the reports are accurate, and track your progress.

2. Budget Your Expenses

Your payment history has a significant impact on your credit score. Establishing a budget can help you pay your loans on time. We recommend organizing your expenses into three categories:

  • Fixed Expenses. Fixed expenses have a regular payment schedule with the same or similar costs each time, like car payments or your monthly mortgage.
  • Variable Expenses. Variable expenses also occur regularly, but they can have different costs each time, like your food and utility bills.
  • Irregular Expenses. As the name suggests, irregular expenses have a more unpredictable payment schedule, like medical bills. If you want to be ready for these unexpected costs, we recommend building up an emergency fund bit by bit.

For more information on budgeting, take a look at our budgeting after bankruptcy guide.

3. Get A New Credit

Acquiring new credit is one of the biggest hurdles you need to overcome after a bankruptcy, but it’s also a crucial step to rebuilding your credit. If you’re having difficulty getting a traditional card, you might consider a secured card or loan. While these require a security deposit, issuers will usually provide you with an unsecured card if you diligently make timely payments.

4. Limit Your Credit Card Usage

Falling back into the same poor habits is one of the most common pitfalls when rebuilding credit after bankruptcy. If credit usage leads you into financial trouble, try to limit using your cards or avoid doing so altogether.

How Long Does It Take to Rebuild Your Credit After Bankruptcy?

How long a bankruptcy stays on your credit report depends on which chapter you filed:

  • Chapter 7. A Chapter 7 bankruptcy will remain on your credit report for ten years. However, if you regularly pay off your debts, you will likely see an improvement in just one or two years after discharge.
  • Chapter 13. Chapter 13 bankruptcies don’t affect your credit for quite as long and fall off at the seven-year mark. This aspect also means you can start rebuilding your credit faster—in as little as 12 to 18 months, in fact.

It might seem as if it takes a long time to rebuild credit after a bankruptcy, but you can speed things up by taking active steps to improve your score.

Need Assistance with Your Bankruptcy Claim?

Successfully rebuilding credit after bankruptcy is all about sticking to a routine, slowly eliminating your bad spending habits, and using effective strategies. If you think filing for bankruptcy is the best option for your financial situation, reach out to our experienced team at Siddons Law Firm. Schedule your free consultation by calling 610-255-7500 today!