Bankruptcy not only takes an emotional toll on the individual but also has a negative effect on their credit! Result: Lenders are reluctant to give credit! This article suggests ways to get back on the road to an excellent credit score and effectively getting creditor confidence back.
The credit score is dependent on several factors: Payment History Amount Outstanding Length of Credit History New Credit Types of Credit One of the first steps to take is to get a copy of a recent credit report from one of the major credit reporting agencies.
Make sure that lenders have removed debt that has been settled through the bankruptcy process.
Keep the "Discharge of Debtor" form in a safe place in case it is needed later as proof that debt is gone.
In general, information on an account can only show on the report for seven years from the date of last activity.
Check that all other information on the report is accurate.
Creditors like to see a stable residential history as well as the employment history.
Payment History - Pay all bills on time! Potential creditors want to see that there are no delinquencies or late payments after bankruptcy filing.
Amount Outstanding - Work on reducing any outstanding balances on credit cards, installment loans etc.
Not only will this improve the Credit Score but shows potential creditors credit worthiness.
Also as the percentage of amount outstanding against that available goes down your credit improves.
Length of Credit History - The longer an account has been open the better the credit score New Credit - Avoid taking any new high balance loans.
Keep repayment capacity in mind! However in order to improve the Credit Score you will have to show credit worthiness and in order to do that you have to get credit.
If you are unable to get an unsecured credit card start with a secured card, after 18 months of on time payments you should be able to get an unsecured card.
Another way to re-establish credit is to piggyback on a friend or relative - have them add you on their account as an additional card holder.
Their credit will not suffer as your bankruptcy will not show on their report but the credit history will show on yours! Types of Credit - Types of credit e.
g.
credit card, installment etc on the Report will also have a part in determining the overall score.
Sometimes the credit score on the report can increase (slightly!) because all past due, delinquencies etc are taken off, however the bankruptcy information will be on there! The above will help get you on the path to an excellent credit score and may even improve your money management skills! S Patel The above is not meant to be professional advise, each situation is different, please consult an experienced advisor with your specific situation.