How Long Must You Wait After Bankruptcy Until You Can Get Credit?

It may be possible to get credit within just a few months after receiving a discharge of bankruptcy. No rules specifically exist to stop lenders from offering credit to bankruptcy filers. It is up to lenders to determine if you meet requirements to obtain credit. Bankruptcy does hurt a credit score, but it does not stop consumers or lenders from establishing new lines of credit.

Qualifying for Credit

To get credit, have steady employment. Build up discretionary income, which is income left over each month after you pay expenses. Doing this helps to reestablish your credit worthiness. Lenders want to be sure your income is high enough to repay the money you are borrowing.

Secured Credit

Borrowers who have existing loans can use those loans to build credit worthiness. Make payments on any existing loans on time. Pay down these debts. Secured loans such as mortgages and car loans that survived bankruptcy can help to build credit. It may also be easier to qualify for secured loans after bankruptcy. Federal Housing Administration (FHA) loans, for example, are available to bankruptcy filers two years after filing bankruptcy.

Clean Up Credit Report

Check credit reports to remove old or inaccurate data. If bankruptcy discharged a debt, be sure this is up to date on the credit report. After seven years, credit bureaus will remove most negative credit data. The bankruptcy will remain for up to 10 years. Monitor credit reports at least yearly to ensure data is up to date.

Apply

Individuals need to get and use credit in order to build up a positive credit score after bankruptcy. Start with secured credit cards or low balance credit cards. While more expensive and with higher fees, consumers can still use these cards for a few years to build up credit. Some credit card lenders may offer credit to bankruptcy filers within six months of the bankruptcy discharge.

Maintain Good Habits

Although bankruptcy remains on credit reports for up to 10 years, individuals can work to build credit worthiness throughout that time. Individuals can see improvements in credit scores by making wise credit decisions. Paying bills on time, keeping balances low and maintaining just a few accounts will build credit over time. Eventually, the interest rates and fees will be lower and credit scores will improve.