How to Raise Your FICO Score After Chapter 13 Bankruptcy

FICO is an acronym for the Fair Isaac Corporation. This is the company that created, according to the Home Buying Institute's Brandon Cornett, "the credit-scoring model that's most popular among mortgage lenders." FICO's system takes the information from a credit report and translates it into a number that can be used to evaluate your creditworthiness. When you file for a Chapter 13 bankruptcy, you are generally instructed to repay some or all of your debt under a court-approved repayment plan. If you complete the court-approved repayment plan, your Chapter 13 bankruptcy could come off your credit report sooner than a Chapter 7, which discharges all of your debt.

Instructions

1

Follow your court-ordered repayment plan. This will not only show those accounts as being paid (even if they are paid late) but will also show that you intend to make good on your debts. In addition, by following the plan, you can discharge the bankruptcy in as little as 7 years.

2

Pay all of your bills on time. This is important for anyone, but if you had a history of late payments before your bankruptcy, making an effort to pay them on time now will give you a chance at improving your score. According to Cornett, reestablishing a "pattern of responsible credit usage" will help you improve your FICO score for the future.

3

Get a new, secured credit card. A secured credit card is a card that you make a deposit on and then are given that amount as your credit limit. So if you put $500 on a secured card, you have a $500 limit. After a year or so, if you pay your balance off in full each month or make regular payments, you can "graduate" to a regular unsecured card.

4

Manage your money well. Seek a financial counselor if necessary. You will need to put a budget in place and schedule payments so that you don't miss them or make late payments. Consistent payments and a renewed effort at managing your financial life will go a long way toward continually improving your FICO score.