This type of question is fairly common but there are a number of issues that have to be dealt with individually.

It’s probably most important to address the “house” question first since that is probably the most significant long term goal and it is also quite probably the primary reason that many people want to fix their credit so their scores can improve.

In order to buy a house, you will need to find somebody to loan you like 100k or 200k. But at this particular stage in life you have absolutely no current positive credit items or anything on your credit report showing that you can be responsible with credit. Having worked for a very large mortgage banker especially during the transition to automated underwriting, I have seen that buying a house has never been easier. Today, there is far less paperwork involved and even fewer financial requirements but you still need to have decent credit.

The next issue is credit itself especially since the way the question was asked on how to improve it.
 

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Unfortunately, too many consumers have a rather limited understanding of the mechanics of how a credit score is derived. In a way, there is often a perception that these scores are obtained in much the same way as taking a test in high school. That is, you start off with a perfect score like 100 points. Then every wrong answer you give deducts points until you arrive at your final score.

It is a simplistic but also a very wrong view of how credit scores are generated although a lot of people are under this impression.

The better way to imagine how a credit score is generated is to take a look at how many college exams are administered. First, you start off with zero points. Then every right answer you give adds points until you arrive at your final score.

As a result, your credit score first begins as non-existent. Unless you have a trade line on your credit report, you are starting off with zero; zilch, nada. The credit activity that you able to create then establishes a score. And the more positive credit items you have, then the more opportunities you have to improve your score.

Just because something negative is falls off of your credit report doesn’t necessarily mean that your credit score is going to make a big jump. You need to have plenty of positive credit activity as well as a history of exercising responsible credit behavior in order to make substantial improvements to your score. And even then, you are looking at several years of responsible behavior before your score can take a big leap.

And not doing anything in your present circumstance because you are afraid of acquiring more debt will only worsen the situation instead of improving it.

Yes, the bankruptcy will age which lessens its negative impact but so will everything else. Whatever good credit items that you do have will also lessen its positive impact on your score. You may have once exercised great credit behavior but as time passes, its value will diminish especially if you are not doing anything else that increases additional positive credit activity.

Consequently, if for the next few years you do absolutely nothing, then whatever positive trade lines you may already have will eventually fall off from your credit report when the bankruptcy is finally removed.

Yes, it is a noble aspiration to avoid credit after you have experienced the harshness of a bankruptcy. But you will only make your bad credit even worse if you do absolutely nothing in attempting to rebuild your credit with positive trade lines.

To get credit or rather, to get better credit terms that will allow you to qualify for a house or a car, you need to already have a history of responsibly managing credit. That in itself is far more important now than anything you have done in the past that screwed up your credit.

Tragically, too many people dwell on their past mistakes without doing anything right now to improve their credit. Establishing good accounts now, albeit some of them may unpleasant and expensive, will do more to improve your credit in the future. The goal is to have a string of positive credit items with good payment histories so when that public record either falls off your credit report or when its negative value has greatly diminished, then your score has many more opportunities to rise.

But just waiting for lots of time to pass is perhaps the worst possible decision to make.

Your credit report doesn’t start off with a perfect credit score. It starts off with nothing. You have to add positive items to it. And even if bad things do show up on your credit report, then it is all the more important to continue to add or maintain the good accounts.

So yes it is true that you have to reestablish your credit, especially if you hope to find somebody to eventually loan you 100k or 200k to buy a house.

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