What to Do After Bankruptcy: Get Your Credit and Finances Back on Track

AffiliatePal is reader-supported. When you buy through links on our site, we may earn an affiliate commission.


Reviving your credit score after declaring bankruptcy can seem like the hardest thing in the world — Yes, even harder than climbing the K2 or Kanchenjunga. 

But it isn’t that difficult … if you arm yourself with some patience, a (small) bucketload of cash, and the tips we’re going to provide for you below. 

Let’s dive into them!

10 Steps to Get Your Finances Back on Track After a Bankruptcy

So, you declared bankruptcy, but now you’re back on the credit train, ready to start fresh. There’s just a small problem: you don’t know where to begin. 

If you’re beginning to panic, don’t. We’ve been around the corner before and know all the tricks to revive your credit score after bankruptcy. 

Find it difficult to believe us? Here are some steps to get started on your journey back to a healthy credit score:

1. Check Your Credit Report

Your credit report allows lenders to determine whether or not they want to let you borrow money. It’s also used to make your credit score, and any negative information in your credit report can decrease it. 

When you declare bankruptcy, it’s going to appear on your credit report and stay there for seven to ten years after the delinquency. So, once you come back from bankruptcy, check your credit report for how long the bankruptcy is on it and wait for it to age off. 

2. Apply for New Credit

Once you check your credit report, apply for a new line of credit because it can help you show that you can responsibly make payments on time. Plus, it’ll help you increase your credit score. You can apply for credit builder loans, secured credit cards, or become an authorized user.  

However, remember that your lender will conduct a hard inquiry when you apply for a new credit line, which can further decrease your credit score. So, only apply for credit lines you know you’re sure you can qualify for. 

3. Utilize a Co-signer 

A co-signer is a person who agrees to become responsible for your loan amount and any additional fees if you are unable to pay it back. 

If you can’t stand up on your legs right now, you can ask a friend or family member to become your co-signer. Make sure you can pay for the loan amount you asked for — you don’t want to hurt their rating. 

4. Consider Becoming an Authorized User 

If asking someone to cosign is impossible, you can go the authorized user route. Becoming an authorized user means asking someone to allow you to use their credit. This method is not the fastest way of getting your credit score up, but it works better than going for shifty credit-builder loans. 

Just make sure the credit card report shows your payment activity as an authorized user, or you won’t build your score. 

5. Get a Secured Credit Card

A secured credit card is backed by a deposit paid by you, which means the credit limit is the amount you have on deposit. These cards seem like a good deal but also come with annual fees and high-interest rates, which can be difficult to deal with constantly. 

Fortunately, you only need to use this card until you become eligible for an unsecured card. 

6. Keep Up Payments with New or Non-Bankruptcy Cards

If you’ve got a new line of credit, ensure you keep up with all the payments you need to make. Try not to make excuses or declare any delinquencies because they’ll only pull down your credit score and your co-signers — if you have one. 

7. Stick to a Budget 

A budget is the best way to ensure you don’t overspend or increase your credit utilization rate too much, decreasing your credit score. So, make a monthly budget and don’t let yourself get over it for the first year or until you develop healthy credit habits. 

It doesn’t matter if you have high income skills and earn a lot of money because your ability to earn money isn’t in question. It’s your ability to pay money to lenders that is in question by lenders, which you can improve by sticking to a budget. 

8. Build an Emergency Fund 

Research conducted by the Urban Institute showed that having only $250 savings can protect you from running up credit cards or high-cost loans. 

So, create an emergency budget for those unforeseen bills that wipe out your credit repayment amount. This way, you’ll never default on your credit repayment. 

9. Practice Responsible Credit Habits

Once you get an unsecured card, make sure you pay on time, keep your credit utilization rate lower than 30% — 10% is excellent, and always keep track of your credit score to make sure you’re increasing it. 

10. Keep a Close Eye on Your Credit Score and Report

Every year, you get one free credit report from TransUnion, Experian, and Equifax. Examine this report (it’ll take you an afternoon) for missing information or any errors. If you find them, file a dispute with your credit-reporting agency. 

The Bottom Line

You may find keeping constant track of your credit history when bouncing back from bankruptcy as difficult as making real paystubs for independent contractors. Yet you need to do it — at least until you get your credit score high enough.

But if you’re finding it difficult, start with the first six tips and gradually introduce the others when you feel comfortable.