September 15, 2021

Ways to Build Credit After Filing Bankruptcy

Filing bankruptcy doesn’t have to hold you back from rebuilding your credit.

8 min read

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When you file bankruptcy, the filing information stays on your credit report for up to 10 years, making obtaining loans and new credit cards extremely difficult – but not impossible.

For one thing, filing bankruptcy will cause your credit score to drop significantly, as much as 240 points for someone with excellent credit. Still don’t give up on ever obtaining a loan or credit card again after filing bankruptcy. There are several ways you can gradually rebuild your credit.

Below are six ways to build credit after you file bankruptcy.

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1. Get a secured credit card

One good way to build credit after bankruptcy is applying for a secured credit card. With a secured card, you deposit a small amount of money, typically ranging from $50 to $300 to secure the card before you are approved. Then your credit limit is set for the same amount.

For example, if you deposit $300, your credit limit will be $300. The deposited amount protects the card issuer in case you stop making payments on the card.

When applying for a secured credit card, make sure the issuer reports to major credit bureaus so you can gradually build a positive payment history. Also, look for a card with a “graduation” component that allows you to eventually move from a secured card to an unsecured card after consistently making payments on time.

Find out: When Should I File for Bankruptcy?

2. Become an authorized user on an account

If you can talk a trustworthy friend or relative into adding you as an authorized user on their credit card account, your credit history can benefit from their good payment history. However, this method also carries risks you may not want to take. For example, if the primary account holder loses his or her job and falls behind on payments, your payment history will also suffer.

Before you go this route, make sure the person who adds you as an authorized user has an impeccable payment history and a long record of financial responsibility.

Find out: 5 Things to Know About Authorized Users Building Credit History

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3. Apply for a retail credit card

It’s generally easier to get approved for retail or gas credit cards than major credit cards, so you may be able to obtain these types of credit cards after some time passes from the date you filed bankruptcy and delinquent accounts more than seven years old drop from your credit report.

Don’t get carried away with your new retail credit card, especially since retail cards typically have much higher interest rates than major credit cards. Better to charge a small item each month and then pay the statement balance in full to rebuild your credit and improve your score.

4. Make all payments on time

Since payment history accounts for 35% of your credit score, one of the best ways to improve your score and rebuild credit is to make all credit card and loan payments on time. Better yet, pay off the statement balance on any credit card each month to build a positive payment history and avoid taking on more debt than you can afford.

5. Take out a credit-builder loan

A “credit-builder” loan is exactly what the name says. This type of loan is typically small – $300 to $1,000 – and helps you build credit with a positive payment history that appears on your credit report and can raise your credit score. However, the way a credit-builder loan works is very different from a traditional loan.

With a credit-builder loan, the bank or credit union deposits the “loan” amount into a locked savings account. Then you pay the financial institution back with small payments over 6 to 24 months. Once you pay off the full amount of the loan, you will receive the money that you paid.

Find out: Credit Builder Loans Pros and Cons: Are They Worth It?

6. Monitor your credit report regularly

It’s always a good idea to monitor your credit, and you’ll want to keep an especially close eye on your report following the bankruptcy. Delinquent accounts included in the bankruptcy will continue to appear on your credit report for up to seven years after you stopped making payments.

Once you file bankruptcy, however, any accounts discharged in the bankruptcy should reflect the discharge status and show a $0 balance. Also make sure the bankruptcy filing date is correct, since that information stays on your credit report for up to 10 years.

If you find errors, contact the credit bureau reporting the information to dispute and correct. You can get one free copy of your credit report yearly at can also obtain a free copy of your credit report and monitor regularly with a reputable service such as Credit Karma.

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