Is Establishing Credit After Bankruptcy Possible?

Establishing credit after bankruptcy may appear impossible, but this is not the case at all. Your credit score after bankruptcy will be considerably lower, but this is to be expected. After all, you have failed to make repayment on all or most of your unsecured debts. Bankruptcy will be displayed on your credit report for a period of up to 10 years. It will take time to re-establish your borrowing credibility.

Improved Income-to-Debt Ratio

Your rating is made up of a number of different constituents, including repayment history, length of credit history, recent credit applications and the types of credit you have. A total of 30% of your score is determined by the amount you owe so a debt relief program, such as bankruptcy, can be highly beneficial as it substantially reduces your income-to-debt ratio.

Establishing Credit After Bankruptcy by Becoming a Reliable Payer

Making punctual repayment both now and in the future will help to gradually re-build your credit score after bankruptcy. Good credit is all about establishing yourself as a reliable payer who doesn't over-borrow. Remember what you learnt from the bankruptcy credit counseling course you attended prior to filing.
Whilst you will have cleared credit cards and most unsecured loans, there are still opportunities to prove that you are someone who a creditor would want to lend money to. You may have a car loan, mortgage or student loan repayments to make. Punctual repayments on existing debts will help your credit score after bankruptcy.

Build New Credit Relationships

Not everyone has further credit agreements after they have been discharged from bankruptcy. However, there are still utility bills to be paid and opportunities to establish new credit arrangements. Consider signing-up to a bad credit unsecured credit card.

If you make reliable payments, Is establishing credit after bankruptcy is achievable within just a couple of years. Chapter 7 bankruptcy will no longer show on your credit report after a period of 10 years. This is reduced to just 7 years in the case of chapter 7 bankruptcy.

Disclaimer: This article in no way attempts to provide legal, financial or tax advice. One should consult a licensed attorney, tax advisor, or other qualified financial professional before proceeding.