Life after chapter 13: Rebuilding Credit

Almost any person can get credit after filing for bankruptcy under Chapter 13. In order to rebuild a score damaged by the filing, a debtor must make responsible choices.

The debtor should expect a big blow to their score immediately after debts are discharged, but should know the effect is not lasting. Scores can and will change when the appropriate measures are taken.

Financial experts recommend immediately creating a workable budget and savings plan.
Sticking to these plans will prohibit overspending and failing to save reserve funds.

Close any dormant accounts deemed open or overdue. Leaving these accounts open bring scores down.

Getting new credit is tantamount. Credit must be had to get better. Two types of credit should be obtained by the debtor post-bankruptcy: Installment credit (auto loans, mortgages, etc.) and revolving credit (credit cards).

Use credit cards for small infrequent purchases. By simply having a credit card will not improve a credit score; it must be used. Charge between 20% and 30% of the card’s credit limit each month, but only if the debtor can pay the balance.

While a bankruptcy will stay on a credit report for about ten years, by following these steps the score can still improve to a more desirable level for both credit holders and lenders.