Filing for Chapter 7 or Chapter 13 Bankruptcy is an excellent way to address financial concerns you may have by discharging unsecured debt and providing you with a fresh economic start.  Although a bankruptcy discharge will have a negative impact on your credit, there are things which you can do to proactively rebuild your credit soon after receiving your discharge.  With a small amount of effort and financial responsibility, successfully rebuilding credit is not as challenging as it may seem.  Below are some things you can do to help expedite your credit recovery.

Pay Existing Bills Early or On Time

Many utilities and existing services you currently have will report your payment activity to credit agencies.  When they do, paying these bills early and on time can have a positive effect on rebuilding credit.  Setting up automated payments are a great way to make sure these bills are paid in a timely manner.  Additionally, many landlords and property managers are beginning to report rental payments and the credit agencies are starting to track this information as well.

If you do not have any utilities or ongoing expenses in your name, opening or transferring them to your name is a great opportunity to rebuild your credit.  When these services are in your name,  you will get the credit for timely payments if the providers are reporting the behavior.  Cable service, water, garbage and electricity are all great examples of ongoing expenses which may be available to you to put in your name.

Apply for Gas or Store Cards Where You Would Typically Pay Cash

A gas or store card can often be easier to get after bankruptcy than a traditional unsecured credit card.  Using these types cards for everyday purchases and paying them back in their entirety at the end of each billing cycle can have a positive impact on your credit without the added expense of interest fees on carrying a balance.  Be cautious, however, as these everyday purchases can quickly add up, creating challenges to paying them in their entirety when they are due.  Err on the side of caution, and work the expected balance payment into your monthly budget.

Apply for a Secured Credit Card

Obtaining a secured credit card is a excellent tool for rebuilding your credit after bankruptcy.  A secured credit card requires your making a deposit which is used as collateral, and the deposited amount becomes your credit limit.  For example, a $400 deposit will grant you a $400 line of credit.  By making small charges and paying the account as required, your activity will have a beneficial impact on your credit.  Over time, it may also be possible to increase the limits without making an additional deposit.  It is important to do research before deciding on a secured card, as the rates and fees vary from bank to bank.  Find a card that reports the payment behavior to the credit agencies.  Be cautious as some institutions will be more attractive than others.

Use a Low Limit Unsecured Credit Card

Many banks will offer a low limit unsecured credit card which can be another effective way of rebuilding credit after bankruptcy.  These cards will typically have a low limit of a few hundred dollars.  By charging sixty to seventy percent of the limit and paying the balance off over a few months, the reported behavior can have a beneficial impact on your credit.

Pay Pre-Bankruptcy and Reaffirmed Debts On Time

If you have any debts that survived your bankruptcy, either through reaffirmation or non-dischargeability, it is important to remain current and make the payments in a timely fashion.  Creditors for non-dischargeable and reaffirmed debts can report you positive as well as negative payment behavior, and the better your payments, the better the report.  Many creditors will report the payments to the reporting agencies, but in the event they do not, it is still a rewarding way to plan and work with a budget.

A bankruptcy discharge will typically remain on your credit for up to ten years, but that impact will fade over time with positive credit behavior.  As a practical matter, your credit score does not necessarily have as much of an impact on your everyday life.  Food, clothing and necessities can all be purchased with cash, regardless of your credit and without the burden of credit card balance anxiety.  After time, it’s not uncommon for post-discharge credit scores to increase dramatically less than a year after your discharge when there are no late payments or collection efforts.

If you have questions about rebuilding your credit after bankruptcy, or are considering filing for bankruptcy, it is best to seek out the advice of a qualified San Francisco bankruptcy attorney in your area.