The decision to file for Chapter 7 bankruptcy should never be taken lightly. It is typically a last resort option for consumers with overwhelming debt. This type of bankruptcy will also stay on your credit report for ten years after you file.

However, Chapter 7 bankruptcy can leave you with a fresh start and an opportunity to rebuild your credit from the ground up. Your discharge papers represent a second chance at credit success. So, it's important to have a post-bankruptcy, credit building plan.

Chapter 7 Bankruptcy and Your Post-Discharge Credit Plan

Rebuild Your Credit after Chapter 7 Bankruptcy

The bad news is that your Chapter 7 bankruptcy filing will stay around for quite a while. Any potential lender that pulls your credit report for the next decade will see this event in your history. This could make you seem risky as a borrower and prevent you from getting better rates on loans and credit card accounts.

But the good news is that your credit score will be fixable almost right away. In fact, according to, depending on your situation, a bankruptcy may actually do minimal damage to your rating. If your credit score was already low before filing, the legal advice site says that your score would "take a modest dip."

On the other hand, if you had a high credit score prior to filing for Chapter 7, your rating would take a much more significant plunge. Either way, once you have your discharge papers in hand and most of your debts wiped away, what you do next will make a big difference.

Your plan to move forward financially should consist of three basic parts:

  1. Replace bad credit habits with good ones.
  2. Slowly take on new loans and revolving credit (credit cards).
  3. Carefully manage your payments and keep a close eye on your credit reports.

Once your credit reports reflect a year or two of good credit management, your bankruptcy will start to matter less to lenders. Even though it will still be there as a negative item, your responsible credit use should make it clear that you're working to improve your status as a borrower.

Post-Bankruptcy Credit Rebuilding and Management Tips

To that end, when it comes to credit, you should never take on more debt than you can comfortably afford to pay off. Of course, if you've been through bankruptcy, you know this all too well. You've learned a valuable lesson and you're ready to move on. And while you're rebuilding your credit profile, here are a few things to keep in mind.

  • Credit cards can serve as good credit building tools. However, you should never be using more than 30% of any of your credit lines. If your credit usage is too high, your credit score can drop even if you're making all of your payments on time.
  • Being late with a payment is never okay. When it comes to the calculation of your credit scores, your payment history matters more than anything. Being prompt with all of your payments is a necessary part of building good credit.
  • Always put a little money aside every month for your savings. Life happens, and one unexpected expense might undo all of your credit repair efforts. That is, unless you're prepared with an emergency fund that will cover such an event.
  • Get familiar with your credit reports. You're entitled to a complimentary copy every 12 months from the 3 major credit bureaus. So, for no charge, you can request one from each every four months. It's important to keep an eye on them because mistakes can sometimes occur. You can catch these errors, report them and have them removed.

Finally, if you need to buy a car after being discharged from your bankruptcy, there are loans available for these borrowers. Not only that, but financing your vehicle purchase can be another way to build good credit.

Getting Approved for a Car Loan after Chapter 7 Bankruptcy

If you've been discharged from a Chapter 7 bankruptcy and need to purchase a vehicle, Auto Credit Express can help. We know that you're eager to get back on the road and on to better credit. And we can match you with a dealership in your area that can work with your situation.

Dealers in our nationwide network are connected to the right kinds of lenders. So, when you apply with us, you won't have to waste your time with dealers that probably can't help you. You should also know that our service is free and there are no obligations attached.

Go ahead and fill out our simple and secure online application to get started today.