Credit Repair After Bankruptcy
Better Credit…Better Options
Don’t ever believe the myth that filing for bankruptcy will cause irreparable damage to your credit. Certainly, filing for bankruptcy will cause some serious damage to a bankrupt individual’s credit score; and it will remain on the credit report for up to ten years and will never be expunged from the bankruptcy court records. Nevertheless, there is still a chance to repair one’s credit even during that ten-year period.
A credit repair service provider can assist in rebuilding a person’s credit score to a favorable status. The first course of action that such a service provider would take is to ensure that the bankruptcy is reflected correctly in the credit report. The bankruptcy has to appear correctly in the record; otherwise, the credit report could still carry a delinquent balance or a collection or charge-off that was included in the bankruptcy, but not reflect that way in the credit report and this would consequently lower the individual’s credit scores.
The balance should be zero on an account that has been included in a bankruptcy filing. If this isn’t the case, an update or correction is in order for the credit report. This can be facilitated by sending dispute letters to the credit bureaus.
It’s imperative to be careful that there aren’t any other errors on the credit report. All accounts have to be thoroughly reviewed including those that weren’t included in the bankruptcy. Any error has to be removed from the file. Another strategy to improve a person’s credit score is to write goodwill letters to creditors. Sometimes this garners positive results and sometimes not, but it is certainly worth a try!
Notably, not all accounts are discharged in a bankruptcy, such as student loans. Those non-bankruptcy payment accounts should be paid on time. This is a positive step that will help rebuild a credit score. Payments that aren’t reflected in the credit report should also be paid on time as a delinquency here can later be reported to the credit bureaus. The credit scoring model allows you to have good credit again after a bankruptcy, particularly the farther you get away from the bankruptcy. However, it is very important that after the bankruptcy that you do not have any negative items show up on your credit report. Having negative items appear on your credit report after a bankruptcy shows a pattern of poor credit and financial management that continues even after the assistance from a bankruptcy.
It is very important to establish credit as you always want positive revolving trade lines as well. You may have to open up a secured credit card at first to reestablish your credit again and if you had poor management with credit card debt in the past this is not a bad idea. A secured credit card has a pre-set limit that is secured by a deposit you make typically in the amount of the credit limit. This allows you to build your credit once again without having the temptations of a typical unsecured credit card.