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Repairing Your Credit Score After Bankruptcy

You can rebuild your credit standing—and raise your credit score—after a bankruptcy. In fact, following the steps below may help you have a higher credit score one year after bankruptcy than you had one year before it!

1. Make on-time bankruptcy payments.

Keeping up-to-date on your bankruptcy payments and paying them in full is vital after a bankruptcy, and prioritizing these payments in your budget will help you start your post-bankruptcy financial life on strong footing.

2. Correct any errors in your credit report.

More than 20% of credit files contain errors that make people look riskier to lenders than they are. The only way to know if yours has an error is to obtain the full report and read it thoroughly. Check out NerdWallet’s guide to disputing credit card errors.

3. Consider applying for a credit card again.

If you’ve been able to set aside some emergency-fund savings and are typically spending less each month than you’re bringing in, it may be time to consider getting a credit card again. Making small purchases (never using more than 30% of your available credit in any month) and on-time, in-full credit card payments can go a long way toward improving your credit score.

a) Secured credit cards. Most people aren’t eligible for a typical credit card soon after bankruptcy, so consider trying a secured credit card. OpenSky and many other companies offer secured credit cards. They typically require a deposit (often $500), and your credit line is usually equal to the deposit.

b) Retail credit cards. After a few months of on-time, in-full payments on a secured credit card, you may be eligible for a retail card for shops such as Kohl’s or Macy’s. The same guidelines apply: Avoid spending more than 30% of your limit each month, and always try to pay it off in full and on time.

4. Consider applying for a small personal loan.

Your credit score can improve more quickly if you’re making on-time payments to more than one type of credit account. If you’ve been making on-time, in-full payments on your secured and/or retail credit card for several months, consider diversifying with a small personal loan to cover expenses like home repairs.

Rebuilding after bankruptcy can seem daunting and may come with the added stress of being tied to medical concerns, divorce, or a loss in the family. But repairing your credit and returning to healthy financial standing is possible. We wish you all the best!