In order to recover from bankruptcy, it is important to proactively seek to improve credit for a better credit score. An adverse credit history not only makes borrowing money more difficult, it could also increase the cost of insurance and make it more difficult to get certain jobs. Chapter 13 and chapter 7 bankruptcy will show on personal credit reports for 7 and 10 years, respectively. However, credit repair after bankruptcy means that a higher credit score can be achieved in a fraction of the time.
Fixing Bad Credit By Removing Credit Report Errors
It is a reality for many discharged bankrupts that some of the debts that have been eliminated by filing for bankruptcy still show as open, overdue financial obligations. The amount of money owed is a vital factor so it is important to get any issues corrected as soon as possible.
- Request a free credit report for Experian, Equifax and TransUnion and request that these errors are removed under the Fair Credit Reporting Act. Check the records for each credit reference agency as each set of records is completely different.
- Provide the credit reference agency with any paperwork from the bankruptcy agreement. This is proof that the debt has been eliminated and should no longer show as active.
- Although not necessary, the services of a credit repair attorney can achieve the same objective. This can be useful if certain creditors are proving unhelpful. A variety of services are offered for a set monthly fee.
Recover from Bankruptcy By Paying Other Debt Punctually
If a better credit score could never be achieved again, there would be no incentive to ever pay a bill on-time again. Whilst filing for bankruptcy will cause a score to plummet, credit repair after bankruptcy can be achieved by repaying new and existing credit arrangements on-time.
- Installment debts. Whilst most unsecured debts will have already been written-off, certain secured debts - mortgages and car loans - will have been reaffirmed under the 2005 bankruptcy laws. Continue to make timely repayments in relation to these debts and student loans and this will lead to a higher credit score.
- Revolving debts. Consider getting a secured or unsecured poor credit card as a source of revolving debt will help with fixing bad credit scores. Avoid using more than 30% of the overall credit limit in any one month - less than 10% is optimal.
Fixing bad credit scores will happen more quickly if timely repayments are made towards a source of both installment and revolving debt.
Credit Repair After Bankruptcy Means Qualification for Finance
Although it is possible to recover from bankruptcy more quickly, this won't happen overnight. Although credit history repair is a gradual process, it is possible to qualify for secured credit cards, poor credit car loans and cash advances from specialist lenders straight away. The problem is that the high risk of default means that the APR is normally extremely high. After a period of 2 to 3 years of fixing bad credit scores, it may also be possible to get a bad credit mortgage.
Sources
Pulliam Weston, Liz. (Feb 11, 2009). "Bounce back fast after bankruptcy." MSN Money.
Asa Ghaffar - Asa has over 10 years of practical experience in loan approval, secured lending, bad credit repair, stock trading and debt management.
Comments