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How to Rebuild Your Credit after Bankruptcy

How to Rebuild Your Credit after Bankruptcy

By Matt Diehl • August 27, 2018

More than 1.5 million Americans file for bankruptcy each year1. If you find yourself being one of them, you may want to put together a plan to rebuild your creditworthiness.

Although your first thought may be to stay away from credit and opt for cash only, that approach may not help your future credit score. Taking the time to rebuild your credit after a bankruptcy may put you in a better position to get a credit card or borrow money in the future and it may also help when looking for a job or in trying to rent an apartment or house.

Start With the Basics

The first step in rebuilding credit is to make a budget so you understand how much money you have coming in and how much you need to pay your bills. There are many easy-to-use online tools, books from your local library and worksheets you can create.

Next, make sure you pay all your bills on time, and whenever possible, in full. If you're still paying down balances on accounts that weren't forgiven as part of the bankruptcy, focus on paying off the debts with the highest interest rates first and try, if possible, to pay more than the minimum due each month.

Another important step is building an emergency fund. Often, bankruptcy filings come as a result of large, unexpected expenses, like medical bills, or the loss of a job and steady income.2 Even if your budget may be tight at this point, try to put a modest amount into a savings account every time you get some extra income.

Can I Get a Credit Card After Bankruptcy?

One strategy for rebuilding credit is to actually use a credit card but do so sparingly. Only charge a few regular expenses each month like your utility or phone bills.

If all your credit card accounts were closed as part of the bankruptcy proceedings, you can still explore options for obtaining a secured credit card account. Secured credit cards are similar to regular credit cards; however, secured credit cards allow you to deposit money into a special bank account and can only charge up to a certain percentage of your deposit amount. Why not just keep the money in your pocket and use it as cash? Because using a secured card can help re-establish credit and maybe even improve your credit score.

In addition, gas or retail credit cards often have fewer restrictions, and you may be able to qualify for one even with a bankruptcy on file. However, be careful to charge only what you can pay in full each month and remember to PAY ON TIME.

Although going through bankruptcy can be very stressful, if you take steps to be careful and proactive, it is possible to rebuild your credit. It just requires some time and patience.



*This article has been updated from its original posting on January 1, 2014.

The information in this article is provided for general education and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness or fitness for any particular purpose. It is not intended to be and does not constitute financial, legal or any other advice specific to you the user or anyone else. The companies and individuals (other than OneMain Financial’s sponsored partners) referred to in this message are not sponsors of, do not endorse, and are not otherwise affiliated with OneMain Financial.