Rebuilding Credit
How to Rebuild Your Credit Quickly After Bankruptcy
Bankruptcy is a turning point—an opportunity to start fresh. While the road to financial recovery isn’t instant, there are proven strategies that can help you rebuild your credit more quickly and get back on track toward financial stability.
Review Your Credit Reports
Before taking any action, obtain free copies of your credit reports from each of the three major credit bureaus (Equifax, Experian, and TransUnion). Carefully check for errors, such as accounts that should have been discharged but are still reported as active. Dispute inaccuracies promptly, as removing them can immediately boost your score.
WalletHub.com is a great resource for checking your credit. You can either use the free service or their impressive premium service which at the time of this writing is less than $6 month. It's a worthwhile investment in our opinion. The premium option gives you credit alerts, set budgets and goals, track where your money is going, plus it will find and cancel unwanted subscriptions!
MyFico.com is a great resource to see the same credit reports that are pulled for mortgage applications.
You can also obtain your credit report for free periodically from the 3 major credit bureaus.
Experian | Equifax |Transunion
Start a Budget and Stick to It
A realistic budget is key to rebuilding your credit. Luckily, you’ve likely already done this in your bankruptcy. By tracking income and expenses, you’ll ensure bills are paid on time, every time—a crucial factor in improving your credit score. Prioritize necessary expenses and savings, then use what’s left to gradually tackle any remaining debts.
If you would like to build your own budget that you can change on the fly, WalletHub offers a premium, comprehensive Budgeting App and credit suite for less than $6 month. It's a worthwhile investment in our opinion. The premium option gives you credit alerts, set budgets and goals, track where your money is going, plus it will find and cancel unwanted subscriptions!
Use a Secured Credit Card Responsibly
One of the quickest ways to rebuild credit is by opening a secured credit card. These cards require a cash deposit that serves as your credit limit. By using the card for small purchases and paying off the balance in full each month, you establish a positive payment history—one of the most influential factors in your credit score.
Self.com is our preferred secured credit card. There are no credit checks required and they offer additional services like secured loans and credit building services! A Feature we love is their credit reporting service for your monthly utility bills and rent to help!
Become an Authorized User
If you have a trusted family member or friend with good credit, consider asking to become an authorized user on one of their credit cards. This can add their positive payment history to your credit report, providing a significant boost. However, ensure that they pay their bills on time, as any missed payments could harm your credit.
Take Out a Credit-Builder Loan
Credit-builder loans are small loans offered by banks or credit unions specifically designed to help people improve their credit. The borrowed funds are held in a savings account, and you make regular payments to gradually unlock the money. By consistently making these payments on time, you build a track record of reliability.
Self.com is our preferred credit builder loan service. There are no credit checks required and they offer additional services like secured credit cards and credit building services! A Feature we love is their credit reporting service for your monthly utility bills and rent to help!
Keep Credit Utilization Low
Utilization is a large part of your credit score. As you begin using credit again, aim to keep your credit utilization ratio—the percentage of available credit you’re using—below 30%. The lower the ratio, the better. High balances can drag down your score, even if you pay on time, so pay off balances in full whenever possible.
Build an Emergency Fund
Dave Ramsey is a huge proponent of this. And for good reason. Having a small emergency fund can prevent you from falling back into debt when unexpected expenses arise. Preferably $1,000 but even a few hundred dollars set aside can help you maintain on-time payments, which are the foundation of credit recovery. This small emergency fund can prevent a small hiccup (unexpected Dr. visit, car repair, etc) from becoming a credit damaging event.
Avoid Unnecessary Credit Applications
Generally, each time you apply for credit, a hard inquiry (some do a soft pull, they will generally tell you beforehand) appears on your report, which can slightly lower your score. After bankruptcy, it’s best to limit applications to only those you truly need. Fewer inquiries mean a steadier path to improvement. Also make sure your credit score is where it needs to be for the credit card you're applying for. Applying for credit cards that require a score higher than your current score increases applications for no reason.
Monitor Your Progress
Keep a close eye on your credit scores and reports as you implement these strategies. Regular monitoring will help you spot errors early, understand how your actions affect your credit, and stay motivated as you see your scores climb.
CreditKarma.com is a great FREE resource for monitoring your credit.
MyFico.com is a great (paid) resource to monitor the same credit reports that are pulled for mortgage applications.
You can also obtain your credit report for free periodically from the 3 major credit bureaus.
Experian | Equifax |Transunion
Credit Repair Companies
Credit repair companies can help individuals rebuild their financial standing after bankruptcy by disputing inaccuracies on credit reports, offering guidance on responsible credit use, and providing strategies to improve credit scores. They assist in negotiating with creditors, ensuring compliance with fair credit laws, and accelerating the process of restoring financial credibility. While results vary, their expertise can make it easier to qualify for loans, lower interest rates, and regain financial stability faster.
CreditCaptain.com is an impressive credit repair service that leverages AI to review your credit reports, spot inaccuracies and dispute with the reporting credit bureau.
A Word of Warning on Credit Repair Companies:
Do Your Research
Determine if the credit repair company is reputable. Research them on Google and other review pages. While there are many legitimate repair services, there are also unscrupulous operators looking to take your hard earned money.
Understand Their Services
Legitimate credit repair companies are transparent about what they offer and set realistic expectations. They can’t guarantee overnight results or promise to erase accurate negative items. If a company makes claims that sound too good to be true, proceed with caution.
Know Your Rights
Under the Credit Repair Organizations Act (CROA), you’re entitled to a written contract explaining your rights, the services provided, and your ability to cancel within three days without penalty. Avoid companies that fail to provide a clear contract and expectations.
Can You Do It Yourself?
Yes, while you can dispute errors and improve your credit independently, a trustworthy credit repair company may expedite and be a helpful partner in your rebuilding journey—just make sure to verify their legitimacy and understand the scope of what they can achieve.
The Bottom Line
Rebuilding credit after bankruptcy takes time, but it doesn’t have to take forever. By staying proactive, responsible, and disciplined, you can demonstrate to lenders that you’re a low-risk borrower. Over time, you’ll regain access to more favorable credit terms, achieve financial stability, and leave the shadow of bankruptcy behind.
