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Hey readers! Today, I am going to let you in on the steps that I am actively taking in an effort to rebuild my credit score after bankruptcy. All of these methods won’t work for everyone, and my process will continue to evolve as I continue my journey, but I wanted to give all of you the opportunity to see what steps I am taking to rebuild my credit score after bankruptcy.

If you are in a similar situation, or even if you are simply looking to increase your credit score, many of the steps that I am taking will help you to achieve those goals too!

Why I Filed For Bankruptcy

If you haven’t heard yet, through the process of my divorce, my ex-wife strong-armed me into filing for bankruptcy. Check out my about page if you’d like to learn a little more about my story.

I won’t go into all of the details, but we had a considerable debt load.

If you want all of the deets, I did a guest post on Millennial Money Man that outlined my financial situation in depth leading up to and during the divorce.

I had a financial plan in place and we were paying back the debt. We had never missed a payment, and our credit scores were both near 800.

No worries, right?

Wrong!

After I filed for divorce, my ex-wife wanted to file bankruptcy. She argued that she could not afford to pay half of the debt load once we split households. I tried to talk her out of it, but there was no budging on the matter from her side.

I had a couple options when she came to me with that decision:

Option 1: Let her file for bankruptcy on her own.

I didn’t choose this option, solely because 99% of the debt that we carried was jointly owned. We each had individual credit cards with small balances, but everything else was joint.

If I would have chosen this option, she would have discharged all of the debt and I would be liable to pay all of it back. Not only would this be highly inconsiderate, since we accumulated the debt together, but I also did not have the financial ability to pay all of the debt by myself.

Lesson learned, don’t go into too much debt as your circumstances may change!

Option 2: File bankruptcy jointly with her.

This is the option I chose. She was going to file bankruptcy anyway and had already quit paying on her half of the debt obligations, so my credit score was tanking. I couldn’t afford to pay all of the debt on my own, so as much as it made me cringe, I decided to go ahead and file bankruptcy jointly with her during the process of our divorce.

My Credit Score After Bankruptcy

I am all about being real and transparent here at Real Money Robert, so I’m going to tell you just how far my credit fell. Earlier I mentioned that my credit score typically hovered around 775-800.

My credit score after bankruptucy dropped to 513!

Ouch!

Double ouch!

That freaking hit me hard!

I looked at this number for several days and it hurt me to see it. Like, hurt me to the core.

This is not me.

This is not how I operate my finances.

How could I have put myself in a position where I had that low of a credit score? I was truly afraid it was going to drop below 500.

Perhaps it did, but I checked my score frequently and 513 is the lowest I ever saw. If you wondering where to check your credit report and credit score, I use a couple sites to make sure that I get accurate info. I use both Credit Karma and Free Credit Report for all of my credit monitoring.

Rebuilding My Credit Score After Bankruptcy

Once my bankruptcy was discharged, I had some serious rebuilding to do. I am currently a couple years from the time that my bankruptcy has been discharged, so keep that in mind. I’ve still got a long way to go, but I’ve already increased my credit score after bankruptcy up to 660! Not where I want to be, but I am getting there.

One thing that helped my credit score and required no action from me was that all of the debts that I used to have was wiped from my credit report, other than my student loans. Those are not dischargeable in bankruptcy, and I’m sitting on a little over $60,000 there. I’m working on paying those off too, but that’s a post for another day! That immediately helped my credit score after bankruptcy.

What I’ve Done So Far

I have only taken 2 steps so far to get my credit score to where it is right now.

Step 1: Incurred a small loan on an engagement ring.

I know, you’re probably thinking I’m crazy, but I got engaged last fall to the most amazing woman I’ve ever met. I had the money available to pay for her engagement ring outright, but I decided to put about 75% down on it and financed the rest through the store at only 1% interest. They only did this for me since I put such a high amount down. Because of the bankruptcy, I would not have been able to finance anything if I didn’t put at least 50% down, nor would I have wanted to.

I’m trying to avoid debt here, not get into more debt. I have enough in savings to pay off this small loan at any time should the need arise, but I’m getting a good payment history built back up in my credit report so that 1% interest I’m paying is worth it to me at this point.

Step 2: Obtained A Secured Credit Card

I obtained a secured credit card through my local bank and use it to make a couple small purchases each month. I usually use it to fill up the gas tank a couple times.

Then, I pay it off every single month.

I treat it like a debit card, so when I make a purchase, I immediately note in my bank ledger that I made the purchase, so I’ll always have the ability to pay it off every month. This avoids the need for me to pay the 24.99% interest rate. Ouch! I’m not touching that.

Plans for the Future

So far, it hasn’t taken a lot to increase my credit score after bankruptcy, but I’ve definitely still got some work ahead of me. I’ve also realized that an ultra-high credit score is no longer extremely important to me.

Why wouldn’t I want a mega high credit score?

I want to increase it since my fiance and I are planning to build a house in the future and I want to get a good interest rate on that mortgage, but I no longer plan to finance cars or incur debt for other expenses.

It’s not worth it.

I’d rather use my money more wisely and save for retirement, invest, and build my income.

With that being said, I have no other plans to build my credit after bankruptcy. I will continue to do what I have already put into place and let my payment history and available credit slowly build my credit back up.

Final Thoughts

This strategy is not for everyone, it is simply what I’ve done so far to help repair my credit score after bankruptcy.

You too can use these methods to increase your credit score, even if you have not filed bankruptcy, and I hope it helps you on your journey.

But please, avoid taking on more debt and instead focus on paying off that debt.

That will really help your credit score out and you’ll have much more money in your pockets!

What are some ways that you’ve built your credit score?

-Real Money Robert