How to Begin Establishing Credit After Bankruptcy

Most people are under the impression that bankruptcy will destroy your credit forever. This is an understandable assumption. Bankruptcy is usually declared when you are so fiscally insolvent that you have to seek legal action to prevent creditors from destroying your life. Of course, it is easy to commit to staying away or preventing such burdensome debt, but sometimes debts hit us without much of a warning. Student loans can build up, credit card bills can add up and your mortgage could go into default mode. Luckily, though, there is such a thing as life after bankruptcy. Here is how to begin establishing credit after bankruptcy.


Your first place to start when you want to establish credit after you have filed for bankruptcy is to apply for a credit card. It will be very difficult to get approved for a credit card, but there are some financial institutions that are a lot more lenient. Of course, some of these institutions may require some kind of cash or property collateral. Also, you will not be granted a high credit maximum in the beginning, or even in the near future. After all, you will only be making minor purchases here and there. You can visit to learn about many different credit card companies and apply to the ones that you are interested in.

Next, you want to stay alert and attentive to the status of your credit report. Just like you check your bank statements, you also want to check your credit file regularly. This will give you an overview of your status, and it will also allow you the opportunity to clear debts before they become a major nuisance. As soon as you see any debts on your report, you want to call the company immediately and settle your outstanding debt. Even if you make a payment agreement with the company, you could prevent it from dragging down your credit score.

After you get a credit card set up and you are on top of your credit score, you also want to stay on top of your finances. This not only includes curtailing your spending, it also means setting up budgets and living by them. For instance, if you have a shopping habit, you want to peel back the shopping sprees. If you spend too much on going out to dinner, you may want to make more meals at home. Of course, this will take a lot of willpower, and it will be necessary for the sake of building credit and making sure you never fall back into a bankruptcy situation again.

In the end, bankruptcy is a big move – it requires a legal declaration of insolvency to protect against creditors. While the creditors will most likely move on, it will be a little tougher for you. There is the slap to the ego, but there is also the slap to your credit, which could send your score to a new low. In the end, though, with a little hard work, creativity, perseverance and a penny-pinching mindset, you will be back on your way to solvency.

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