Although bankruptcy has credit consequences, for many people it can be a positive choice. According to Paula Langguth Ryan, author of "Bouncing Back from Bankruptcy," a number of myths exist about credit repair after bankruptcy.

Myth #1: Bankruptcy Ruins Your Credit Forever

A bankruptcy stays on your credit report for seven to ten years -- not forever. Assuming you have no further debt problems, you could very well have a higher score at the end of that period than you do now.

Myth #2: Bankruptcy Means No Credit for Ten Years

In fact, you may start receiving credit card offers immediately after you file for bankruptcy, although they often have very expensive terms and interest rates. As your credit improves, the quality of the offers you receive should also improve.

Myth #3: A Credit Card Will Just Get You Back Into Trouble

Although getting a credit card is a risk for irresponsible spenders, for most people it is the best path toward credit repair after bankruptcy. With discipline, education and good spending habits, you can make it work.

Myth #4: Employers Check Your Credit, So Bankruptcy Means No Job

Particularly in a tough economic climate, a single bankruptcy is unlikely to be a deal-breaker for most employers. "If you think the job is coming down to you and another person, I recommend being upfront about your past bankruptcy," says Ryan.

Myth #5: Bankruptcy Means Never Owning a Home or Car

Most consumers' credit scores begin to improve relatively soon after bankruptcy, allowing them to borrow money at relatively reasonable rates within four to five years. Assuming you have no further issues, your credit score may climb into the "good" range within seven to ten years.

Three Tips for Improving Your Credit

  • Make sure your credit reports are accurate. Make sure any discharged debts are listed correctly, not as delinquent. You have a right to a free copy of your credit report each year from each of the three major credit bureaus (annualcreditreport.com). Stagger your requests once every four months to monitor their accuracy on an ongoing basis.
  • If you decide to get a secured credit card, choose carefully. Look for one with no application fee and a 25-day grace period. Also, try to work with a card issuer that will report your credit history to the three major credit bureaus but won't report that your card is secured so you can build a positive record.
  • Pay your credit card bill as soon as it arrives. A late payment could end up as a black mark on your credit report, which signals creditors that you are still a bad risk. Also, many cards charge interest over the course of the month, so early payments may save you money.

Related Resource

"5 post-bankruptcy myths," (Linda Childers, CreditCards.com, July 20, 2009)