How to Rebuild Your Credit After Bankruptcy

A Chapter 7 bankruptcy stays on your credit report for 10 years. A Chapter 13 stays for 7. But the impact on your score fades much faster than that — most people see meaningful recovery within 18 to 24 months of discharge.

Step one after discharge: pull all three credit reports. Every account discharged in bankruptcy should be reported with a $0 balance and a status of 'included in bankruptcy.' Anything else is inaccurate and can be disputed.

Step two: open a secured credit card. Use it for one small purchase per month, pay it in full before the statement date, and let the on-time payment history report. Two secured cards is better than one.

Step three: add a credit-builder loan from a credit union. These small installment loans report to all three bureaus and rebuild the installment side of your credit mix.

Step four: after 6 to 12 months of perfect payments on the secured card, apply for an unsecured starter card. Capital One and Discover have programs designed for post-bankruptcy rebuilders.

Many people coming out of bankruptcy still have inaccurate negative items on their report from before the filing. Removing those items can add another 40 to 100 points on top of the rebuilding work.