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How difficult is it to rebuild credit after bankruptcy?

On Behalf of | Jan 11, 2021 | Bankruptcy | 0 comments

If you are one of the millions of people who recently went through bankruptcy, you are now ready to begin your new financial life. Unfortunately, you had to give up all your credit cards as part of your bankruptcy. Therefore, reestablishing your credit probably represents your number one objective. 

Credit.com reports that a bankruptcy generally drops your credit score by between 130-200 points. It takes most people five years to get their score back to its pre-bankruptcy level. This does not mean, however, that you must live without credit for the next five years. There are things you can do to reestablish your credit much sooner than that. 


Your first step consists of devising a monthly budget. After all, how can you make wise financial decisions if you do not know how much money you have coming in and going out each month? 

Do not forget to include the monthly portion of bills you pay quarterly, semiannually or annually, such as insurance premiums, in your budget. 

As for income, include only your salary or wages, not bonuses you expect to receive. Better to have “found money” when you receive those bonuses than to treat them as givens. 

Working your budget

Next, determine how to cut expenses. Then simply work your budget, refraining from impulse and unnecessary purchases. Within six months, you likely should have sufficient excess money to open a savings account. Continue contributing to it so it can tide you over in the event of an emergency. 

Now you can apply for your first post-bankruptcy credit card. While you likely will qualify for only prepaid or high-interest cards, get one and use it wisely, paying the entire balance each month. Once you establish a sterling 6-month payment history, you can either ask for an interest reduction or apply for a more favorable card.