How To Rebuild Credit After Bankruptcy

How Does Filing Bankruptcy Affect Your Credit?

The common wisdom is that filing bankruptcy hurts your credit. But the truth is that it really depends on what your credit history looks like and what your credit score is before you file.

📈 If you have good or average credit and few or no negative items on your credit history, filing bankruptcy often has a negative impact on your score.

📉 If you’re starting with a bad credit score and a lot of negative items on your credit report, filing bankruptcy doesn’t usually have as negative an impact on your credit score. If your credit is really bad, filing bankruptcy may even boost your credit score.

💡Negative items on your credit history can include late payments, missed payments, accounts in collections, settled debts, repossessions, and foreclosures.

In either case, filing bankruptcy gives you a fresh financial start and a clean slate to begin rebuilding your credit.

How Long Does It Take To Rebuild Credit After Filing Bankruptcy?

The timeline for rebuilding your credit after filing bankruptcy will depend on your starting score and what actions you take.

People who are proactive in rebuilding their credit often see small improvements in a matter of months, with noticeable improvements within 12–18 months after filing.

How Long Does Bankruptcy Stay on Your Credit Report?

🗓️ Chapter 7 stays on your credit report for 10 years. Chapter 13 stays on your credit report for seven years.

But in many ways, time is on your side: As time passes, the impact of your bankruptcy filing on your credit decreases. 

You can also use the time following your bankruptcy filing to start adding positive items to your credit history. This also helps offset the potential negative impact of a bankruptcy filing.

What Are the Best Ways To Rebuild Credit After Bankruptcy?

There are a lot of great ways to start rebuilding your credit after filing Chapter 7, and not all of them require taking out credit cards or taking on more debt.

Here are some of the top suggestions for how to rebuild your credit:

• Become an authorized user on someone else’s credit card.

• Get a secured credit card.

• Take out a credit builder loan.

• Do some DIY credit reporting for monthly bills you’re already paying.

• Apply for and responsibly use a regular credit card.

Become an Authorized User on Someone Else’s Credit Card Account

One low-risk way to start building your credit history is by becoming an authorized user on someone else’s credit card. 

💡 An authorized user is someone who’s added to another person’s credit card account — usually a family member or close friend. 

You’ll get a card in your name, but you won’t be legally responsible for paying the bill. The main account holder is the one who’s on the hook for any debt.

You don’t need to use the credit card to start seeing a benefit. If the credit card company reports authorized user activity to the credit bureaus, the on-time payments and low balances will help your credit score too. 

Just make sure the person adding you has a strong payment history and keeps their balance low. If they miss payments or carry a high balance, it could hurt your credit instead of helping it. 

⚠️ Not all credit card companies report authorized user information to the credit bureaus, so it’s worth checking before getting added. It’s also a good idea to have a clear agreement with the account holder about how you’ll use the card (if at all).

Get a Secured Credit Card 

A secured credit card is one of the most common tools people use to rebuild their credit after filing Chapter 7 bankruptcy. 

💳 Secured cards work a lot like regular credit cards, but there’s one key difference: You pay a refundable security deposit up front. This deposit usually becomes your credit limit. For example, if you deposit $300, your credit limit is typically $300. This also makes it a lower-risk option than a regular credit card.

Even though you’ve put money down, you’re still borrowing from the credit card company when you use the card, and you’ll still owe a payment each month. You’ll also be charged interest if you don’t pay off the balance in full.

The real benefit of a secured card is that most issuers report your payments to the three major credit bureaus. Making on-time payments and keeping your balance low shows that you’re managing credit responsibly, which helps rebuild your credit score over time.

💸 Many people use a secured credit card for small, regular purchases — like gas or groceries — and pay off the balance in full each month. This helps build a strong payment history without racking up interest or debt.

Some credit card companies may even offer to upgrade you to a regular (unsecured) card after a period of responsible use, usually 6–12 months. 

⚠️ Be sure to choose a secured card with no or low annual fees, and confirm that the issuer reports to all three credit bureaus. Not all of them do.

Take Out a Credit Builder Loan

Credit builder loans are designed for people who want to improve their credit and don’t need access to the money right away. They can also double as a savings account.

💡 Here’s how they work: The lender — usually a bank, credit union, or nonprofit — deposits the loan amount into a locked savings account. You make fixed monthly payments over a set period, usually 6–24 months. Once the loan is fully paid, you get the money from the account.

Even though you don’t get the funds up front, your payments are reported to the major credit bureaus. Making on-time payments builds a positive credit history, which helps improve your credit score.

These loans don’t usually require good credit to qualify, making them a good option after bankruptcy. Just be sure to pay on time — missed payments can hurt your score.

You can find credit builder loans through local credit unions, community banks, and some online lenders. Look for low fees and confirm the lender reports to all three credit bureaus.

Report Your Rent, Utilities, and Other Payments to the Credit Bureaus

If you’re paying rent, phone bills, or utilities on time each month, that positive history doesn’t usually show up on your credit report — unless you take steps to report it.

Some services let you add certain payments to your credit file. This can help increase your credit score, especially if you have a thin credit history after Chapter 7 bankruptcy. You’ll continue making payments as usual, but now they can help you build credit at the same time.

✨Self and RentReporters both offer rent reporting to all three credit bureaus.

Keep in mind that not all credit bureaus or lenders use this information when checking your credit, but many people still see a score boost from using these self-reporting tools.

Self and RentReporters are affiliate partners, which means Upsolve may earn a small commission if you choose to use their paid services. This helps keep our services free.

Get a Regular Credit Card

Opening a new credit card after Chapter 7 bankruptcy can help you rebuild your credit, as long as you use it carefully. You might start receiving credit card offers in the mail even before your bankruptcy is fully discharged.

Be cautious with these offers. Many cards marketed to recent filers come with high interest rates and steep annual fees. If you decide to apply for a regular (unsecured) credit card, look for one with low fees and use it wisely.

🔑 Most people in this situation charge only what they can afford to pay off in full each month. This avoids interest charges and helps build a strong payment history — two key steps toward improving your credit score.

Monitor Your Credit and Dispute Any Errors

One of the simplest — and most effective — ways to rebuild your credit after bankruptcy is to regularly check your credit reports. This helps you track your progress, catch mistakes, and make sure your credit history accurately reflects the fresh start you’ve earned.

💻 You’re entitled to a free credit report once a week at AnnualCreditReport.com. You can access reports from each of the three major credit bureaus: TransUnion, Experian, and Equifax.

You don’t have to check all three every week, but try to review at least one report regularly, whether that’s monthly, quarterly, or whatever schedule works for you.

🔎  When reviewing your credit reports, look for:

• Accounts that should’ve been discharged in your bankruptcy

• Incorrect payment statuses or balances

• Duplicate or outdated accounts

• Signs of identity theft or unfamiliar accounts

If you find an error, you can file a dispute with the credit bureau to correct it. Getting inaccurate negative information removed can give your credit score a helpful boost. It also ensures lenders are seeing the most accurate version of your financial history.

How Building Strong Debt Management Habits Helps Rebuild Credit

After Chapter 7 bankruptcy, how you handle your remaining and future debts plays a big role in rebuilding your credit. One of the best habits you can develop is making on-time payments — every single month. This applies to new credit cards, car loans, and any debts that weren’t wiped out in your case, like recent tax debt.

If you reaffirmed your car loan during bankruptcy, it’s important to make those payments on time, every time. Even if the loan wasn’t officially reaffirmed, keeping a strong payment history could still help show future lenders that you’re creditworthy.

For other debts that survived bankruptcy, like certain tax debts, many people choose to set up a payment plan. Tackling these balances steadily over time helps avoid new collection issues and shows that you're serious about staying on track.

Beyond just paying on time, it’s a good idea to:

✅ Repay more than the minimum whenever you can — even if you can’t pay the full balance. This helps reduce interest charges and pay down your debts faster.

✅ Keep an eye on your credit utilization ratio. That’s how much of your available credit you're using. Experts recommend staying between 10% and 30%. 

✅ Monitor your credit reports regularly. Watching your progress can help you catch errors, spot identity theft early, and stay motivated as your credit improves.

Common Credit Mistakes After Bankruptcy

Many people are eager to rebuild their credit after filing bankruptcy, which can lead to missteps or mistakes. Here are some common credit mistakes to be aware of:

❌ Trying to open too many new accounts too soon.

Every time you apply for new credit, lenders run a hard inquiry on your credit report, which can ding your score. Instead of applying for several new accounts, do some research to see which types of credit accounts will serve you best and apply sparingly.

❌ Not building an emergency fund.

It may not seem like an emergency fund has anything to do with credit, but it plays a big role. Without savings, even a small emergency — like a car repair or a medical bill — can force you to rely on credit cards or short-term loans. If you can’t pay that debt off quickly, you’ll rack up interest and potentially fall behind on payments. That can hurt your credit score and undo the progress you’ve made. Having a financial cushion helps you avoid new debt and stay in control.

❌ Not understanding the terms of new credit.

Many people are surprised by how quickly credit card and loan offers show up after filing bankruptcy. But most of these offers come with steep interest rates, high fees, or unfavorable terms. Before applying for any new credit, take the time to read the fine print. Make sure you understand the interest rate, annual fee, and repayment terms — and look for the most affordable and transparent option available to you.

❌ Not having a basic financial plan.

 You don’t need a complicated budget, but having some kind of financial plan is key to staying on track after bankruptcy. That means knowing your income, keeping tabs on your expenses, and having a simple system to make sure bills get paid on time.

Late or missed payments are one of the fastest ways to hurt your credit score — especially when you’re in the rebuilding stage. A basic plan can help you stay organized and avoid falling behind. And if money’s still tight, picking up a side hustle or cutting back on non-essential spending can help you stay afloat while you build a stronger foundation.

💡 There are a ton of free tools available to help you stay on track! Find one that you like and make it work for you. 

Let’s Summarize...

Rebuilding your credit after filing bankruptcy is possible as long as you’re proactive and committed to taking the necessary steps to establish a good credit history. While rebuilding credit after bankruptcy is a short- or medium-term project, maintaining good credit is a long-term commitment. 

In other words, don’t just think in terms of how to build credit after bankruptcy. Commit to better budgeting, careful management of credit accounts, and making informed financial decisions to keep your credit rating healthy for good.