How to Build Your Credit After a Job Loss & Bankrupcy

Rebuilding your credit after a job loss and bankruptcy may be less difficult than you think. According to Microsoft Money, many people bounce back quickly after bankruptcy. They can get new credit cards almost immediately, and new car loans and even home mortgages after just a few years. If your bankruptcy was caused by a job loss, then the first key is getting back to work again. With most of your debts eliminated by the bankruptcy and a new job, you're in a perfect position for a fresh start.

Instructions

1

Apply for a secured credit card. Secured credit cards are Master Cards or Visas and require a deposit into a savings account. The money in savings serves as collateral, removing the risk for the lender and making approval easy, even for people emerging from bankruptcy. The cards look and work like any other Master Card or Visa. Ask about the cards at your bank or credit union or check credit card comparison websites (see Resources). Some secured cards are available with just a $200 savings deposit. Establish a new, positive payment history by keeping a small balance on the card and never missing a payment.

2

Apply for a second secured card after a few months. Also, maintain a very small balance on this card and make timely payments.

3

Get an installment loan from a bank. Use the same strategy as with the secured credit cards. Save say, $1,500 and buy a bank-issued certificate of deposit. Then take out an installment loan for the full $1,500 using the CD as collateral. Place the $1,500 in a savings account and direct the bank to withdraw from the account each month to cover the installment payments.

4

Apply for unsecured credit after about a year. The positive payment histories from the two secured cards and the installment loan should make you a good candidate. Start with department store credit cards and gas station cards. Then move up to unsecured Master Cards and Visas. Continue making all your payments on time while not spending more than 30 percent of your credit line on revolving accounts. Complete your rebuilding by applying for a car loan or mortgage when the time is right.