When financial burden becomes overwhelming, Bankruptcy is an option that people turn to when all other options have been exhausted. This can happen for many different reasons. I worked in the financial services industry for many years, and financial struggles can affect people of ALL income brackets and social standing. It’s been my experience that while it sometimes is the result of financial mistakes, all too often it’s due to circumstances beyond the control of those suffering – be it medical issues, job loss, death of a loved one, or many other afflictions.
Should you find yourself in a position where you are trying to determine the affects bankruptcy will have, how to recover from bankruptcy, or just how to work through improving your credit, Credit.com is a great resource. I’ve never used their services, but they have a ton of articles that contain very helpful information.
Once you’ve completed a bankruptcy, you might be surprised to discover just how much your credit situation has improved. It IS possible for many people to qualify for a loan after bankruptcy! While the rates will not be the best, getting a reasonable loan amount and paying it back on time can do wonders to improve your score! While acquiring new debt just after a bankruptcy can seem counter intuitive, it IS important to re-establish new (and good) credit as soon as possible, you’ll just want to be VERY careful approaching it, to ensure that you can make your new payments on time. Eventually you’ll qualify for better interest rates, once you’ve proven that you’re situation has improved and you’re now able handle the amount of credit you’ve taken on.
Important things to focus on when improving credit:
- Make ALL payments on time or early – consider scheduling auto payment & ensure funds are available.
- Keep a mix of secured loans (Mortgage, Auto Payment) and revolving lines (credit cards, personal loans).
- Stay under 30% credit utilization ($300 on a $1000 credit limit)
- Limit the number of new credit lines you apply for (1 every 6-12 months)
- Length of account history – keep accounts open as long as possible to establish a healthy history. Try to use revolving credit lines regularly (I have something I pay $10/month for charged to a card each month, then pay in full. No interest paid, but it shows an on time monthly payment on an active account).
- Check your credit report regularly. (see below)
I recommend requesting a report every 4 months from Annual Credit Report. This is the ONLY website where Federal law allows you to access each of your credit reports from all three of the major credit bureaus once per year for free. NO credit card is required, and no fees will be charged. Put reminders on your calendar. For example, in January, request from Equifax, in May request from TransUnion, and then in September request from Experian. This will allow you to make sure all items discharged from your bankruptcy are so noted, to take care of any errors that might appear in a timely manner, and to watch your score improve as you begin to make payments on time, over time.
*This post is sponsored, all thoughts and opinions expressed are solely my own.
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