Although it’s one of the hardest decisions to make, it doesn’t mean that everything is over. If you follow our guide to rebuilding, you can go from a Chapter 7 Bankruptcy to a 700 Credit Score in no time flat!
Probably the most important decision you can make after taking the plunge and filing for bankruptcy is to ensure you are active in your rebuilding process! So many people feel like they are blacklisted from any credit after filing that they just avoid rebuilding for months – or even years!
The best way to move past your Chapter 7 Bankruptcy is to get involved in the world of credit right away, but make sure that every decision you make is responsible – and prove to yourself that your bankruptcy was exactly the fresh start you needed!
With our guide, you will be able to have multiple credit cards within 12 months of your bankruptcy discharge and if you follow our advice exactly, you will have a 700+ score before you hit 2 years!
So what are you waiting for? If you’re thinking about filing or maybe have just been discharged, it’s the perfect time to plan your rebuild and start your post-bankruptcy life on the right foot!
HOW TO:
Go From BK To A 700 FICO – FAST!
Pre-Discharge Steps
Sign up for a 3-bureau credit monitoring service. This will allow you to pull a copy of your reports after your discharge to verify errors. We recommend signing up for Credit Check Total. (For more information on monitoring services, see our post here.)
Once you have a membership, you will be able to view your FICO 8 scores and get once-a-month access to your 3-bureau reports. This is a critical step in following your credit path and keeping your reports clean.
STEP 1. Cleaning Up After Bankruptcy
Only begin this program after you have received your Chapter 7 discharge from the court.
- Order a fresh copy of your credit reports from CCT a week after your discharge has been issued.
- Print out the reports from each bureau and run through them with a pen.
- Make sure all accounts you included in bankruptcy are reporting correctly. Mark any that do not show:
- A $0 Balance
- “Current” Status (Not default, charge-off, etc.)
- Noted as ‘Included In Bankruptcy’
- File a dispute for all accounts that are not reporting correctly as listed above. Dispute them as “incorrect balance” and “included in bankruptcy”. You must dispute each account with the credit bureau reporting it. (For information on how to prepare disputes and letter templates, see our guide.)
- Send your disputes via Certified Mail Return Receipt Requested.
- In about a week you should receive your green signature cards back from the dispute letters. Keep these in a file for your records.
- The full results will take about 30 days to complete – but often are completed sooner. (After 15 days, begin Step #2 below.)
- For accounts that are not updated to correct information, send a “Method of Verification” letter to the credit bureau. Send this CMRRR as well.
- At the same time you send the MOV letters, get the contact information for the credit furnisher (original creditor) and mail them a letter that disputes the information reporting about them. Remember to only include their account in this letter.
- At this point, your credit reports should be all cleaned up. For anything that is still not corrected, you should seek out a local FCRA attorney to force the bureaus to comply. (These attorneys will take on your case for free since violators of the FCRA are required to pay attorney fees.)
STEP 2. Beginning Your Rebuild
- 15 days after receiving your CMRRR signature cards in the mail, head on over to CreditOne Bank and see what they prequalify you for. Accept the offer unless it is a secured card.
- If they only offer you a secured credit card, turn it down and find one from our list of Secured Cards That Will Graduate.
- The day after you activate your CreditOne card, visit SelfLender and open a credit builder loan. You pick your term, and there’s no money upfront. Plus, they don’t perform a hard inquiry!
- For the next 5 months, only charge about 10% of the available limit and make sure you pay the balance off on the day you receive the bill.
- A great way to stay under this guideline is to just have a small bill (like your CCT membership) charge to the card each month.
At this point, you will now have two open trade lines reporting.
STEP 3. Working Your Rebuild
- After 5 months of on-time payments to your CreditOne card, and only charging a small amount, it’s now time to open a Capital One card. You can check your prequalified offers online.
- When the prequalify tool comes back with several cards for you, select the Quicksilver 1 Rewards card. It has a $39 AF, and 0% intro APR.
- This card will be a starter card that will enroll you in Cap1’s “Credit Steps” program. After 5-6 months of good payment history, they will give you an automatic credit limit increase.
- At this point, you’ll want to change your purchasing patterns with your cards and use the Cap1 card more than the Credit One card. There are two reasons for this:
- More usage on Cap1 will result in better limits over time as Cap1 likes to see people using their cards.
- The CreditOne card is just a starter card. You simply need it because you want multiple TL reporting on your credit file. It also has worse terms than Cap1.
- Make sure you charge at least $1/month to the Credit One card and keep your usage of the Cap1 card to a minimum.
- Pay off almost the entire Cap1 balance, but leave around $10 on the card a couple days before your statement cuts.
- Continue this for the next 6 months.
STEP 4. Growing Your Rebuild & Credit Portfolio
- At this point, you’ve had your Credit One card for almost a year, and your Cap1 card is 6 months old.
- If you have not gotten your “Credit Steps” increase on your Cap1 card yet, you should call and find out why. Usually, they issue it automatically, but if there is an issue preventing them from doing it, you’ll definitely want to know why.
- For those that did not burn Discover in their bankruptcy – it’s now your time to apply for one of their fantastic credit cards! No matter what offer they give you, accept it. This card will grow with you over time.
- If you did burn Discover – move on to Step 5 below.
- After applying (and only after your approval) for the Discover card, you will want to cancel your Credit One card before you hit the 12th month. This will save you $$$ on your annual fee, and you don’t need this starter card anymore. Make sure you’ve paid the balance before cancelling.
STEP 5. Finishing Your Trek to 700
- So, you’ve made it 12 months already! Congrats to you! Give yourself a pat on the back, because getting to this point was no easy feat, but now you have a great credit backbone to work on!
- The SelfLender loan you opened should be finished now (or very, very close) and you can finally withdraw your money!
- Once you have the cash in hand, put it in savings and re-open a new credit-builder loan. Pick a larger size loan that you had before and you can use your savings from the first loan to make the payments for a few months! (Remember, SelfLender doesn’t require cash upfront, so this is basically an unsecured loan.)
- 2 weeks after your Discover card has generated your 2nd billing statement, head on over to Barclays to apply for their Apple Rewards Visa.
- There is no reason for Barclays to deny you unless you’ve done something outside of this program or missed payments. If they do decline you, make sure you call their reconsideration line and ask them to review the decision. They have a very high rate of approving reconsideration calls, so this is a step you do not want to miss!
- Right now you’ll be the proud owner of 3 unsecured credit cards and one credit builder loan!
- You will need stay at this status for the next 6 months, and your current FICO scores should be hovering around 670 (usually even higher!).
STEP 6. Maintenance Steps To Push You to 700
- Make sure you pull your annual credit report and dispute anything that is incorrect and keep your reports clean. This is a step any consumer should take to keep their credit healthy.
- For the 6 months following your approval for Barclays, you’ll be in a “gardening phase”, meaning that you’re simply just doing regular maintenance on what you have and not seeking new credit.
- Keep only one card with a small balance (no more than 10% of your credit limit) and allow it to report with that to the bureaus. Pay off your other two cards before their statements cut.
- As your credit accounts age, your score will grow up. Additionally, all three cards in your wallet are designed to grow with you, so feel free to call in for a CLI if you’ve gone 6 months or a year since your last increase. Sometimes they check your credit for this, but if you haven’t been on an application spree, you shouldn’t see any adverse affects.
- After 12 months of responsible credit card use (never charge more than 30% of your limit), you’ll easily hit the 700 mark on your credit score, and you’ll have your new savings from your SelfLender loan available too!
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