HOW TO INCREASE MY CREDIT SCORE AFTER A BANKRUPTCY DISCHARGESeptember 21, 2019 / by Marco / Categories : Business
If you are crushed under the heavy burden of debt, you can get relief by filing for bankruptcy. This will clear most of your existing debts. However, bankruptcy could have a significant effect on your credit by plummeting your credit score. With a low rating, it will be more difficult to qualify for credit facilities like auto loans at better rates. The credit limits of the credit cards that you are already holding could also be affected.
How long will a bankruptcy remain on your credit report?
The bankruptcy will remain on your credit report for seven years if you file for Chapter 13 bankruptcy or ten years if you file for Chapter 7 bankruptcy.
But does this mean that you cannot get credit until your bankruptcy is off of your credit report? Or will your score be fixed at a low position forever? Of course not.
Ways to rebuild your score after bankruptcy
Despite the negative effect of bankruptcy on your score, you can employ the following steps to boost your score and stand better chances of accessing credit:
Scrutinize your credit report frequently
Credit reports are not 100% correct, as was demonstrated by a 2012 study which found that about 25% of US borrowers found errors in their credit reports that may have impacted their credit score. Although you could spend a few dollars to check the reports regularly, say monthly, the benefits far exceed the cost, plus you are entitled to one credit report free of charge every year.
After your bankruptcy, you must ensure that the following is on your credit report:
Ø All of the discharged accounts are reported as such.
Ø The balances for the discharged accounts are all nil.
Ø The date of filing bankruptcy is correct. Since bankruptcy can appear on your credit report for up to ten years from that date, its correctness is critical.
If you find any errors, dispute them by following the right procedure.
Engage professionals in credit repair
You may not know how to go about rebuilding your score or you may wish to improve it a bit faster. This is where credit repair experts come in and will help you to buy tradelines to boost your score. Are you wondering how tradelines can help your credit? Well, tradelines are the accounts that that appear on your credit report. The tradelines (accounts) used to boost your score are called authorized tradelines, and they have a good repayment history and credit score. The authorized tradelines have spots where other borrowers can be added. When you are added to them and this information is reported to credit agencies, your score rises.
Pay your continuing obligations on time
Since bankruptcy does not discharge all loans, especially those that are secured (in which case the lender must get the value of the collateral), you need to continue paying on time. These loans are reported to the credit bureaus, so defaulting on them could ruin your credit repair efforts.
Seek credit products that suit you
With the tainted pre-bankruptcy repayment history, you may be deemed as a risky borrower, but you can take care of that by giving extra assurance that the lenders will not lose the money they will lend you. Some of the credit products that can help to give you credit and assist in restoring your score includes secured loans, secured credit cards, and co-signed loans and credit cards.
It is possible to rebuild your credit score after bankruptcy and get loans. Besides the above tactics, you need to come up with a budget to keep your spending in check and to ensure that you pay your obligations on time. You also need to limit applying for unnecessary new loans or credit cards as they can affect your score negatively.
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