Tennessee consumers can take steps to improve their credit after a bankruptcy even though it will stay on the credit record for several years. The first step is to make a budget. This will help a person pay bills on time, and 35 percent of a FICO score is based on when payments are made. A budget should also allow a person to put money away into an emergency fund. About 10 percent of people who declare bankruptcy go on to do so a second time, and this emergency fund may provide the cushion needed to keep a person from sliding into debt again.

Credit reporting agencies offer a free report each year, and these should be checked annually in case there are any errors. There are also more concrete steps a person can take to rebuild credit. Using a credit card regularly and paying it off demonstrates a person’s ability to make payments on time.

Some people are unable to get a credit card after bankruptcy. If this is the case, a secured credit card is another option. People can put a certain amount of money in an account, and this becomes their line of credit. A subprime auto loan is another way people can demonstrate their ability to make regular payments.

Another consideration for people worried about a credit rating is that being consistently behind on bills and defaulting on credit cards will damage their credit as well while bankruptcy offers a fresh financial start. Filing for bankruptcy can put an immediate stop to creditor activity such as foreclosure. With a Chapter 13 bankruptcy, people can work out a plan to pay back creditors over a period of three or five years and keep their assets, including a home.