Whether you’ve already gone through bankruptcy or foreclosure, or you’re considering bankruptcy, or facing foreclosure, you’re probably wondering how you’ll ever be able to recover. As you well know, both bankruptcy and foreclosure don’t look so great on your credit history and both can negatively affect your credit score significantly. A lower score will make it harder to get credit in the future. It makes it more difficult to purchase a home or even rent and it can even make it harder to get a job if the employer decides to do a credit check.

It should be the first goal of anyone who has experienced bankruptcy or foreclosure to start rebuilding their credit. What follows is five easy (but not necessarily fast) steps to recovering after bankruptcy or foreclosure. Keep in mind that rebuilding credit takes time and patience.
Check your credit report

Before you can begin your road to recovery you need to know you’re starting point. Many free websites like Credit Karma will allow you to check your credit report for free. Your credit report will tell you what your credit score is and why it is what it is. You should check your credit report periodically during your recovery to track your progress.

Know where you went wrong

Regardless of your circumstances there is always something you could have done better. No amount of credit rebuilding will solve your financial problems if you don’t fix the underlying cause. If you know that excessive spending is something you struggle with, you need to find ways to control your spending habits. Even if your financial problems were the result of something outside your control like a medical emergency or sudden job loss, having an emergency fund could prevent another bankruptcy or foreclosure down the road. Once you’ve identified what you can do differently, start doing it.

Start improving your credit score

The most important factor credit reporting agencies use to determine a credit score is whether or not you’re paying bills on time. The second most important factor is your utilization ratio. Simply put, never exceed 30% of your credit card’s limit and always pay off your card in full each billing period and you’ll start seeing an improvement in your credit score.

Protect existing credit

In order to prove you can be trusted you need to have credit. If you have any existing lines of credit open, don’t cancel them. Do everything you can to keep your existing lines of credit open as this will boost your credit score.
Obtain new credit

It’s also important that you obtain new credit after bankruptcy or foreclosure. Because that can be difficult for someone with a low credit score, you may need to apply for a secured credit card or a regular credit card with a very high interest rate and a small balance. It’s going to be a simple card with no great rewards but it will allow you to start rebuilding your credit.

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Source: foxbusiness.com/personal-finance/2014/05/09/rebuilding-bad-credit-in-5-really-slow-steps/