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Declaring bankruptcy is a difficult decision. On one hand, you get relief from overwhelming debt. On the other hand, it has a really negative effect on your credit.  

The impact on your credit depends on what type of bankruptcy you file.

In Chapter 7 bankruptcy, your debts are completely cleared and it’s on your credit record for 10 years.

With Chapter 13 bankruptcy, you pay down part of your debt and it stays on your credit record for 7 years. 

The good news is that you can start rebuilding your credit right away. Follow these 5 steps to build new credit history. 

1. check your credit report

Checking your credit report is always a good idea, but it’s even more important after bankruptcy. Make sure accounts that were cleared as part of the bankruptcy are closed.1

Keep checking your credit report as you work on rebuilding your credit. You can get free weekly online credit reports from Equifax, Experian and TransUnion through the end of 2022.

In future years, you can get one free copy of your credit report per year from each of the three credit bureaus.  

You can request a credit report at  

2. practice good credit habits

One of the most important things you can do to rebuild credit history is make on-time payments on bills and credit accounts that are still open.

Credit scoring models put more emphasis on recent information,1 so each on-time payment adds new, positive information to your record. 

Keeping account balances low can also help improve your credit score.

Part of your score is based on how close you are to the credit limit on your accounts, so try to use only 30% or less of your total available credit.2 

3. keep a budget and set goals

A budget makes it much easier to manage your money and keep track of when payments are due. Make sure your budget includes making at least the minimum payment on credit accounts.3  

Review your budget often and make adjustments if you’re overspending or if you want to save for a big purchase.

Don’t have a budget? This article will help you get started: 

Setting small, achievable financial goals can help you stay motivated. For example, building an emergency fund is a realistic goal that can help you stay on budget when something unexpected comes up.3 

4. find a credit product that will help you rebuild

Getting a new credit account and using it wisely can help you build new credit history.  

It’s important to choose a company that focuses on helping people build credit. Fingerhut will consider you for a credit account 60 to 90 days after you file bankruptcy.  

Be sure to check the terms and conditions before you sign up for any new credit account.4 

5. give it time

You’re taking the first steps in your journey to rebuild credit. Stick with it, and over time you can rebuild your credit and reach your financial goals. 

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