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Rebuilding Credit

Ron Lundquist

Ron Lundquist: Rebuilding Credit

One of the most common questions I receive regarding bankruptcy is how to maintain credit. Individuals who file are concerned that their credit score will take a serious dive due to bankruptcy and never recover, leaving them to struggle over taking out new loans, buying a house or car, or simply applying for a credit card.

It’s important to understand that though bankruptcy affects credit, it doesn’t destroy credit. It’s not the purpose of bankruptcy to mark you as incompetent or make it more difficult for you to live. In fact, bankruptcy law exists to help you achieve a fresh start. Even before filing bankruptcy, your credit is plummeting quickly due to unpaid debt.

Bankruptcy halts the effects your finances are having on you and your credit. When your debts are wiped away and you are given a blank slate, you can improve your credit much faster and effectively than ever before. So even if bankruptcy takes a bite out of your credit score, it enables you to immediately start building it back up.

For most clients rebuilding credit after bankruptcy can be successfully accomplished, and a lot sooner then you may think. During my initial consultation, I offer an informational packet to all of my clients about Rebuilding Credit After Bankruptcy.

The packet covers a lot of information to help clients achieve a fresh start. Take a look at just a few of the steps you should take to rebuild your credit:

  1. Wait Until Your Case is Complete - Your debts are not wiped away until you get an official case discharge, which includes paperwork from the court that testifies your debt is gone. Taking steps toward rebuilding credit before that point is a waste of time. However, you can use the time to form a credit rebuilding plan.

  2. Annual Credit Report - It’s vital to keep track of your credit in order to keep it from decreasing unexpectedly. A credit report is a useful way to inform you about any and all outstanding debt that is currently being held against your credit. Thus, you can develop a better plan to make payments and move forward. You have the right to obtain one FREE credit report every year from each of the three major credit bureaus: Equifax, Experian, and Transunion. You can discover your credit score online at Obtain one from each of the three bureaus every four months to stay on top of your credit.

  3. Know Your Score - If you take the step above, you’ll have a good idea about your credit score. Knowledge is power. By knowing your score, you can avoiding applying and being denied for credit cards, loans, etc. This is important because each additional credit inquiry by an outside source can harm the credit you are trying to rebuild.

  4. Secured Credit Cards - You may not be able to open a normal, unsecured credit card after filing bankruptcy. That’s okay. Banks allow you to put money down behind a credit card and use it like a credit card to rebuild your credit. This secured credit card is the most popular method clients use to rebuild credit. The key is to make a small charge on the card each month and you pay off that small charge right away during the same month.

  5. Make Payments on Non-Dischargeable Debt - Student loans, child support, and other types of debt may not have been forgiven when you filed bankruptcy. Figure out a plan to make small, manageable monthly payments on these.

  6. Open a CD or Take a Loan - Opening a CD or taking a loan (for instance, to pay off a new car) are potential but risky ways to rebuild credit. They require new monthly payments and can become overwhelming, especially if you don’t see the end of the repayment in the near future. Only attempt one of these if you have the necessary extra monthly income and no other debts outstanding.

I am recognized as a debt relief agency, and provide bankruptcy relief using the laws of the State or Minnesota and the United States Bankruptcy Code.

If you have any questions about how bankruptcy will affect your credit or how to recover from bad credit after bankruptcy, feel free to ask me during your initial consultation or anytime during the bankruptcy process. I am here to help. Simply call 651-454-0007 or email

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