How to Establish Credit After a Chapter 7

Chapter 7 bankruptcy can be devastating and you may believe your credit is irreparable, but it can be rebuilt. Just after bankruptcy you will find it very difficult to obtain credit and, when it is offered, it will be at a much higher interest rate than before. However, you will have to take the necessary steps to start to establish credit again after a Chapter 7, and the process may cost more than it does for people with no credit or a better credit score.

Instructions

1

Pay all of your bills on time. The power company and telephone company are a type of creditor and if you default or pay these bills late, then your credit score will continue to fall or remain low. When you pay them on time, your credit will begin to increase.

2

Begin watching your credit report. Get a credit report every few months. Make sure everything is accurately listed. Monitor your report for errors and call the credit agency that reported erroneous information as soon as you see it.

3

Apply for a secured credit card. It is easy to qualify for a secured card and this is an option that will help you control your spending. Deposit the amount of money the credit card company requires. This can be a few hundred dollars and will vary depending on the credit card company you use. Your credit limit will be the amount of your deposit. The deposit is used to secure the credit card in case you default on your payments. Shop for a secured card with the best rates available. Read the contract carefully to see what the fees and interest rates will be, as these will run higher for secured cards.

4

Apply for an unsecured credit card. In some cases you may still be eligible for an unsecured credit card even after Chapter 7. Some banks may offer you credit because you have no debt. Shop for different options.

5

Make small charges on your credit card and pay it all off on a monthly basis. Avoid carrying a balance if you want to establish credit. Make your payments on time and never make a late payment.

6

Wait several months before expecting your credit score to rise. Stay away from new credit card offers and continue with this credit and repayment process for a full year until your credit has been re-established.