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One of the biggest concerns for those considering filing bankruptcy, is how their credit will be affected after the bankruptcy, and how long it will take to rebuild credit in order to buy a home, car, or qualify for other lines of credits.

Bankruptcy can lower your credit score significantly, up to 300 points, or possibly as little as 100 points, depending on your history of late payments and overall credit rating before filing. Shockingly, bankruptcy filers are often inundated with credit offers immediately after filing! Since you can only file bankruptcy once every 7 years, a lot of creditors including credit card companies and car dealers, lure people into opening credit lines knowing that they won’t be able to file bankruptcy any time soon. Of course, you will pay much higher interest rates for these credit lines.

If you are smart you will wait until your credit has improved before taking out credit lines. In order to raise your credit score after bankruptcy you will need to pay all of your debts on time. You can take out a secured credit card, where you put money into an account, typically $300-$500, and then use the card like a credit card, making the payments each month on time. After 12-18 months you’ll be able to get an unsecured credit card with a low limit and continue to use it monthly and pay it off each month.

By slowly establishing credit, making on time payments, and not carrying credit card debt, your credit score will improve enough to make a major purchase such as a home or car within 2-4 years at great interest rates.