Rebuilding Credit After Bankruptcy

A bankruptcy is required by law to remain on your credit account for a minimum of ten years. While this may seem very devastating, the truth is that most people can begin to rebuild their credit in as little as 18 months. In fact, if you follow a few simple good credit habits, you can even purchase a home within two years.

The first thing that you must do to reestablish your credit is to obtain a copy of your credit reports from all three bureaus. While these companies are obligated to report correct information on your report, it is your obligation to make sure the information on the report is correct.

Once you receive your report you need to verify every entry on the report. If there are entries for past due accounts that were included in your bankruptcy, you must dispute them right away. Always keep copies of your bankruptcy discharge papers available to provide as proof if necessary.

You can easily dispute items on your reports through the online dispute page available at all three agencies. The agencies have 30 days to respond to your dispute request. At that time, the information must be corrected or completely removed from your report.

Once you have gone through this process you will have begun to establish better credit. However, during the first year after your bankruptcy you may need to review your credit file every three months to make sure that new entries do not crop up that are associated with the bankruptcy.

The Next Steps To Reestablishing Credit

The next thing you will need to do is practice good credit habits. Make sure all of your bills are paid on time, and ask different creditors to report to your credit file of your good habits.

You can establish a credit card through a secured credit card company. This will require you to place a deposit down on a card. Once you have a deposit in place, that amount will be your credit limit. If you practice good habits with the card eventually the limit will be raised and you will have a regular credit card again.

The final thing that you can do is be added to a family members credit account that has good credit. By having your name on the account you will gain points for having an account in good standings. However, this can be very risky. If there is any chance that this relative or friend may go into financial stress and their credit goes bad, your credit score will also be affected. Also, in many states, if you are a buyer on the account and the account goes bad, you may be responsible for the debt. Use this option with care.