Of the many reasons people are wary of filing for bankruptcy, one of the biggest is the affect is has on a person’s credit score. It stands to reason that creditors aren’t exactly excited at the prospect of lending to an individual who has recently filed for bankruptcy. In a way this is a good thing. It prevents many people who are just looking for an easy way out of debt from filing for bankruptcy. For those who have exhausted all of their other options however, and bankruptcy is a last resort, the idea of starting over with a poor credit score is pretty frightening. Rather than putting off bankruptcy however, take comfort in knowing that your credit score can recover after bankruptcy, and there is a lot you can do immediately after bankruptcy to speed that process up.

Apply for credit

A common mistake many of the recently bankrupt make is assuming that they can’t get any credit right away. Actually, you can apply and be approved for credit the same day your bankruptcy is finalized. In order to start rebuilding your credit, that’s exactly where you’ll want to start. Your credit score improves as you demonstrate that you can wisely use your credit. To do that, you need to have credit in the first place.

When applying for a line of credit, you can expect to have a difficult time. You may get turned down a lot before you finally find a creditor willing to work with you. Because of your recent bankruptcy, your line of credit will be pretty small, maybe a few hundred dollars, and the interest rate will be pretty high. You may even have to settle for a secured credit card in which your credit limit is only as high as the deposit you put up for collateral.

Use it wisely

Now that you have credit, you need to prove you can use it wisely. Even though your new line of credit may seem pathetic, it will work great for your purposes. A common misconception about building credit is that you need to use your card a lot or carry a balance. The opposite is actually true. If the balance is frequently near the limit, it tells creditors you rely on credit too much. The best way to use your new line of credit is to use it often, but for small purchases. Then make sure to pay it off in full by the end of the billing cycle. As you demonstrate you can use credit responsibly, you’ll see your credit score recovering much faster after bankruptcy.

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