Rebuilding a credit score after bankruptcy is not as difficult as one would imagine. While there is no silver bullet for improving your credit score, demonstrating a positive payment history and responsible credit management really comes down to common sense. With that in mind, below are some common sense ideas to help get you started:
First, pay your debts that survive the bankruptcy early every month. Certain debts may be non-dischargeable (e.g. student loans), and others may have been reaffirmed during the bankruptcy (e.g. a car loan). Pay these monthly debts religiously and early.
Second, obtain a secured loan from your local bank. Some banks and credit unions will help you rebuild your credit history by extending a small loan secured by collateral. In most cases that collateral is a cash deposit. For instance, you borrow $500 and deposit $500 with the bank as collateral to secure the loan. Each month you make monthly loan installments to the bank until the debt is paid (and your $500 deposit is returned to you). Make sure that the bank reports these on-time monthly payments to the credit bureaus. At the end, you not only have a positive credit history, but you have the beginnings of a good relationship with a local bank.
Third, obtain revolving debt. This is tricky because we are talking about credit cards here. In some cases a friend or family member may be able to add you as an authorized user to an existing credit card account. If the card holder is responsible with the monthly payments, the credit card company will report these payments as a positive payment history on your credit report.
A high interest credit card is also an option, but these cards are not advisable immediately after a bankruptcy as the terms and interest rates are horrific. Bankruptcy debtors are amazed at the number of credit card offers they receive after their bankruptcy discharge, so be judicious (and sensible!) in deciding which offers to accept.
Fourth, monitor your credit report and make sure that your on-time monthly payments are reported by your creditors. Debts that were discharged by your bankruptcy case may also reappear, so it is important to inspect your credit report from time-to-time to safeguard your score.
The goal of rebuilding your credit score is to demonstrate a history of responsible credit management. This requires time and effort. Remember that because of the bankruptcy on your record, your credit score is very fragile and requires vigilance and regular attention. Fortunately, with each month, and each on-time payment, your credit score will increase.