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How to Help Clients With Bankruptcy Credit Repair

By: Keenan Jones Last updated: February 14, 2020


In 2007, the United States experienced an economic downturn that left millions of homes in foreclosure, millions of people unemployed, and many people declaring bankruptcy. People were underwater on loans and drowning in bills: they were up a financial creek without a paddle. Bankruptcy eliminated a problematic financial history, but it destroyed their credit scores.

How can you repair credit for clients who have wiped out their credit history through bankruptcy?

Learn what it takes to navigate bankruptcy credit repair successfully, and you will get many happy clients and referrals in return. 

The first step to helping bankruptcy credit repair clients is understanding the current impact it has on their financial situation. Loans cost much more for people with a fresh bankruptcy and credit scores take time and effort to improve to a pre-bankruptcy level. Bankruptcy credit repair requires expertise and finesse: we will show you how to do it the right way.

Get Into a Future State of Mind

For someone who has worked so hard to build their credit, losing it all is a major blow. They need help them to look toward the positives and their financial future, rather than an unsavory financial past.

Here are some ways you can highlight the positive future:

  • Set financial goals and remind the client of them
  • Pointing out the work the client has done so far (like reaching out to a credit repair specialist)
  • Encourage your client with success stories of your clients, even your own credit repair story

Know How to Help

Since credit reports are front-loaded, the most recent items (those within 24 months) have the most significant impact. A bankruptcy can stay on your client’s credit report for ten years, but their credit score does not need to suffer for a decade.

There are many practical ways to help a bankruptcy credit repair client, and most of them are things you are already doing with your other credit repair clients.

1. Know which type of bankruptcy it was

Not all bankruptcies are created equal in the United States. A Chapter 7 or Chapter 11 bankruptcy stays on the client’s credit report for a decade, which a Chapter 13 bankruptcy only stays on for seven years.

The type of bankruptcy matters a little bit if your client is nearing the seven or ten-year mark because the bankruptcy could be off of their credit report soon. Even if the bankruptcy is off the report, they clients who have a bankruptcy in their history can use help to get their credit back to excellent.

2. Explain how credit works

Many people do not understand how credit works and how a credit score impacts their financial health and decisions. There’s no need to launch into a full-scale course on credit repair, but it can be helpful for bankruptcy credit repair clients to see how credit fits into their overall financial framework. 


The Big Three credit bureaus (Experian, Equifax, and Transunion) calculate the credit score (also known as a FICO® score) based on:

    • Amounts owed - 30 percent of the score
    • Payment history - 35 percent of the score
    • Length of credit history - 15 percent of the score
    • New Credit - 10 percent of the score
    • Credit Mix - 10 percent of the score

You are going to help your credit repair client improve in all of these areas.

3. Perform a credit audit

Just as you do for all of your credit repair clients, get a fast and thorough credit analysis in seconds by merely uploading their most recent credit report into Credit Repair Cloud’s software and running “Simple Audit.” Once you’ve reviewed their credit report, you’ll know what areas to focus on first. You may be surprised how many times errors appear on a credit report. Start with the most recent negative items (those within 24 months) and formulate your credit repair game plan.

4. Apply for credit

Our advice to the majority of credit repair clients is to stop applying for credit. However, bankruptcy credit repair requires establishing a credit score, which requires a credit history.

According to FICO®, your client will need:

“ least one account that has been open for six months or longer, and at least one account that has been reported to the credit bureau within the last six months.”

- MyFICO™ Website

Tips for smart credit building after a bankruptcy:

  • Use secured credit only
  • Only spend as much as you can pay off every month
  • Follow good credit habits to a T with all credit cards or credit lines (see below)

5. Teach good credit habits

The credit cards and loans doled out like candy in the 1990s and early 2000s made it very easy for people building their credit to run up a sizeable balance. You can teach your clients better credit habits such as:

  • Pay down all debts below 30% and only use that much of any credit line
  • Pay every bill on time
  • Once they’ve established credit, stop applying for new credit cards


Over time these great habits pay off and you can celebrate the improvement in your client’s credit score.

Help Clients See a Brighter Future

Credit repair is gratifying work. Helping people who have been through some difficult financial times is why many people get into the credit repair business. Follow these tips, and you are going to be an incredible resource for people in your community.

Helping a bankruptcy credit repair client is not that different from supporting your other credit repair clients. The main difference is that you need to help them establish credit and build better credit habits at the same time. You can give bankruptcy credit repair clients a paddle and teach them how to navigate their own credit successfully.

Learn everything you need to know about running a successful credit repair business.

Click here to download your FREE copy of The Ultimate Guide to Starting a Credit Repair Business now!


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