How to Rebuild Credit After Chapter 7 Bankruptcy

Filing for Chapter 7 bankruptcy can be a big blow to your credit score. This proceeding wipes out most financial debts, with the exception of non-exempt debts (like student loans or child support). However, it's possible to rebuild your credit. Over time, you can make simple changes that will help boost your credit score.

Instructions

1. Apply for a secured credit card. According to MSN Money, to rebuild your credit, you need to have access to credit. Secured credit cards require a deposit to open, but your credit score will improve over time. Eventually, the lender might give you access to an unsecured credit card, which doesn't require a deposit.

2. Clean up bankruptcy debts. If your bankruptcy debts are still listed on your credit report, it's pulling down your credit score (they will be showing as overdue if they're still listed). These accounts should be closed with bankruptcy. Contact each of the three major credit bureaus (Experian, Equifax and TransUnion) and ask them to correct reporting on the accounts. List each account in the letter and include a copy of your bankruptcy paperwork to support your claim. A free credit report can be ordered every 12 months to review this information.

3. Review your credit report for other errors in addition to accounts covered by bankruptcy. Look for accounts that don't belong to you. If you find fraudulent activity, file a police report. Send a copy of the police report with a letter disputing the accounts to each credit bureau. Include your full legal name and current address.

4. Make timely credit payments. Late payments have a negative effect on your credit score, according to MSN Money. Consider setting up automatic payments through your bank. Over time, this will help boost your credit score.

Tips & Warnings

• According to MSN Money, you need two types of accounts to rebuild your credit, including installment accounts (auto loans and mortgages) and revolving accounts (like credit cards and home equity lines of credit). Showing your responsibility using these accounts will help rebuild credit after Chapter 7 bankruptcy.

• Pay off your unsecured credit card every month (don't carry a balance). The goal of having this card is to boost your credit score. Diligently paying off the bill monthly will ensure the balance doesn't get out of hand.

References

• MSN Money: "Bounce Back Fast after Bankruptcy;" Liz Pulliam Weston
• U.S. Courts: "Liquidation under the Bankruptcy Code"
• Annual Credit Report: "Free Credit Reports"