How to Improve a Credit Score After Bankruptcy

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Start rebuilding your credit as soon as your bankruptcy is completed.
Start rebuilding your credit as soon as your bankruptcy is completed. (Image: Steve Woods/iStock/Getty Images)

Bankruptcy gives you a chance start over again financially, but it wreaks havoc on your credit score. Find ways to improve your score after completing Chapter 7 or Chapter 13 bankruptcy if you want to re-establish credit to access loans or credit lines. Since recent activity plays a bigger role in your credit score than what you did in the past, do what you can to maintain good credit after the bankruptcy to raise your score.

Use Remaining Debts

Repaying loans that were not included in your bankruptcy, such as home, auto or student loans, gives you an opportunity to improve your credit score if the bank reports your payment history to the major credit agencies. You can also reaffirm some of the debts for which you kept up payments and are continuing to pay at least the monthly minimum. If all of your debts were discharged, your credit score may start going up almost immediately, because all of those former delinquent accounts are no longer dragging down your score.

Pay Other Bills on Time

Pay all of your bills on time after your bankruptcy goes through. Use automatic bill payment services to make sure your utility bills and minimum payments on other lines of credit are sent before the due date. Car dealers are often eager to offer credit after a bankruptcy, albeit at high interest rates, so make the monthly payments on time if you take out a car loan to help boost your credit score. By avoiding late payments for just six months after bankruptcy, "Daily Finance" says your credit score could reach into the 700s.

Obtain Secured Credit

Apply for a secured credit card to start building your score. Financial institutions that offer secured cards usually charge an annual fee for the card and require you to keep a specific amount of money in the bank that matches your credit limit. Even if you don’t want to use the card, charge a small amount each month and pay it off on time to help boost your score. Before accepting the card, make sure the company reports to the credit bureaus, or your credit score won’t be affected.

Chapter 7 Versus 13

The type of bankruptcy you file may have some effect on whether or not you get credit at all after the bankruptcy. Both Chapter 7 and Chapter 13 bankruptcies negatively affect credit scores, but the creditor reviewing your application may feel your willingness to repay some or all of your debt by filing Chapter 13 means you make a better credit risk than someone who chose to erase all of his debts with a Chapter 7 bankruptcy.

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