by Connie Earl Robertson

Created on: August 26, 2009   Last Updated: September 24, 2009

One of the worst things you can do to your credit rating is declare bankruptcy. It doesn't matter if it is Chapter 7 or Chapter 13 bankruptcy. To the credit unions, bankruptcy is bankruptcy. It will remain on your credit history for 7 to 10 years.

When you have a bad credit rating it will affect every area of your life. You wont be able to get a loan to buy a home without paying a much higher interest rate, and many times new employers will run a credit check before hiring, and you may not get the job. You can't easily get a credit card and basically, you can't do the things you used to do. Surprisingly, the damage done to your credit score wont be nearly as bad as everyone thinks. What can you do to rebuild your credit after bankruptcy?

Get a Secured Credit Card

One of the quickest ways to begin to rebuild your credit is to get a secured credit card. Make sure that it is from a larger bank that reports your payments to the credit rating companies, or all of your effort won't amount to anything. A secured credit card is one where you pay the bank a certain amount of money up front, and then, they will allow you to make purchases from 100% to 150% of the amount they have on hold.

Make Payments On Time

If your home was exempt from the Chapter 7 bankruptcy and you are still making loan payments, be sure to make your monthly payments on time or even early. The same holds true of any other payments you may still have. This will show the credit rating companies that you are now managing your money wisely. On-line credit companies watch how you make your payments, and they raise your score accordingly.

Ride On Another Persons Credit

This is often called piggy backing. If you have a close family member or friend who trusts you, he might be willing to add your name to his credit card, and get you a card of your own. If he has a perfect credit record and less than a 50% balance on his card, all he has to do is request a form for another card and fill it out. Once your name is on his account, his past record transfers directly to your account, and you, too, will start out with a perfect record and less than a 50% balance. If you could secure several accounts such as this, your credit score would climb quickly. The hard part will be finding a person with that kind of credit who would be willing to trust you that much after you had to file bankruptcy.

Get a High Limit Credit Card

It won't be easy with your lousy credit rating, but try to get another credit card with a high limit from a large bank. Since you can't file bankruptcy again for 7 to 8 years, some banks will be willing to take the risk. Once you get one, use it cautiously. Be sure to only buy small items you have money to pay for. and set that money aside so that you have it when the credit card comes due. Be faithful paying your payments before the due date.

Keep All Credit Card Balances Below 50%

One of the secrets of obtaining high credit scores is to keep all of your credit card balances below 50%. As long as you do that, you show that you can control your spending and manage your money well.

It's not all that easy to recover from a bankruptcy, but it's not an impossibility. If you follow these steps faithfully over the next 18 months to 2 years, your score will be back up above 600, and you will be able to secure a loan for regular interest rates. So keep looking forward, and manage your money carefully!

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