One of the Biggest mistakes I see people make is not building good credit soon enough after a traumatic credit event like a bankruptcy.  Going through a BK can be traumatic and most people tell themselves “Never again” and pledge to use cash or Debit cards going forward so they never have to go through it again.   On the surface this makes sense..only buy what you can afford and avoid getting caught in the credit cycle.   But, when you try to buy a home a few years down the line, this mindset becomes an issue.  From a credit standpoint, you have not created any good credit during that time, so all the bank sees is that bankruptcy and then years of nothing., so the bank doesn’t see any evidence that you can manage your finances.  Paying cash and using debit cards doesn’t show up in a credit report. It would be nice if it did but currently it doesn’t show up. 

Does this mean you have to go out and run up a lot of debt to get back in the game?  No.    The Key is to open a couple secured credit cards right after the bankruptcy  discharges and start using them to pay for small things that you would normally pay cash for.   Items like Lunch, Gas, Drinks at the bar or whatever you plan to use cash or debit cards for.  Keep the the dollar amounts small, (under $100 monthly) so that when you get the statement, you can easily pay them off in full.  It’s the same thing is paying cash but now you are getting “credit” for it and you will build a record of good credit over time that will put you in the right place to use your credit for one time large purchases like a house or car.  

Use the card for one or two small purchases a month, then put the card away so you you aren’t tempted to use if further.  Wait for the bill, then pay off the full balance.  Do this monthly on 2-3 cards.  You will have to start with secured cards but will quickly get offers for cards with no annual fee or requirement for a secured deposit.  I do not advise jumping from one card to another.  once you get the no fee, no deposit card, stay put and use this system.  

Rebounding from a major negative credit event is doable. it requires some attention and diligence, but it does not require going deeper in debt. Follow the above plan and you can take a 500 fico score into the 700s after a year or so.