Life After Bankruptcy: 5 Ways to Rebuild Credit Score
A common myth many believe is that filing a bankruptcy will ruin their credit long term; that filing a bankruptcy means losing a chance to buy a home or obtain financing. Our Orange County bankruptcy attorneys can help you prioritize your debt relief and get you bank on track. Through these five pro tips, you can help reclaim your financial health.
1. Dispute credit report errors.
We all have three separate credit reports. The three major credit bureaus that provide each credit reports are Experian, Equifax, and TransUnion. It's hard to look at credit reports at times when it seems like we have an F rating, when we deserve an A. However, did you know that credit reports can contain mistakes that do not belong to you? It's important to check your credit reports for false information that may be lowering your credit score.
The Federal Trade Commission conducted a study in 2012 that found 1 in 5 consumers had an error on at least one of their credit reports. The Federal Trade Commission found in a 2015 follow-up study that an unresolved error on one of their reports believe at least one piece of disputed information is still inaccurate. Credit scores are solely based from credit reports; therefore it is important to ensure the information on your credit report is true.
Under the Fair Credit Reporting Act, you are entitled to a free copy of all three credit reports once a year. You can access these reports by the government-mandated site run by the major bureaus, AnnualCreditReport.com.
Some questions you can ask yourself as you are looking through your credit report are: Is all of my personal information( including Social Security number, birth date, full name, and address) accurate? Are all of my credit accounts being reported? Are there any payments I made on time that are marked as late or missing? Are there any accounts or applications for credit I didn't make or remember? Are there any items on from decades ago that were taken care of still appearing on my report?
It's possible that one credit report from one bureau may contain errors while the others do not. For this reason, it should be a priority to check all three credit reports for inaccuracies.
2. Pay your bills on time.
cheduled time is a great way to establish credit history. It shows others that you can manage credit and adhere to your contractual obligation to pay bills as agreed.
Late payments can result in costly penalties, and may even cause your interest rate to rise significantly. Missing an entire payment for the month will be reported in your credit history, causing your credit score to take a huge hit. That's why it's important to try and make payments on time, even if it is only the minimum amount. Paying your bills on time shows that you are committed, trustworthy, and diligent when it comes to paying your debts.
By paying your debts on time, this demonstrates to others, whether to companies you are applying for their services or companies that want to hire you, that you are highly capable of managing your finances. Companies will want to do business with you, and more than likely will offer their best rates and lowest down payments.
Some tips to help you pay your bills on time include setting up your bills on auto payment with your bank, using an online calendar to set reminders to make payments, and scheduling an email to be sent to you when a bill is due.
3. Build a strong credit age( don't close old credit cards).
Closing old credit accounts simply because the accounts are being used anymore is a common mistake some people make. Older credit accounts with good history can assist you in building strong credit scores over time. Closing an account that's not in use means deleting great credit history after ten years; this results in a drop in your credit score.
A short credit history makes it very difficult for people to establish credit history. Let's face it: there are not many options you have in order to improve your credit. Some try to remedy this through piggy backing into a friend or family member's credit card through being added as an authorized user. However, it may be hard to find someone who is willing to do this as they would be responsible for any purchases you make. Your other option is to simply wait it out, make your payments, and allowing your accounts to building a good credit age.
4. Get a secured credit card.
There are two types of credit cards: secured and unsecured. On one hand, you have an unsecured credit card which is not secured by any type of collateral; this is the most common type of credit card. The other type of credit card is a secured credit card. Secured credit cards are basically secured through a deposit into a checking account that "secures" the line of credit the bank or lender is extending to you. For example, you may deposit $200 into your checking account and receive a line of credit for $200. You can get a secured credit card with bad credit. Adding a new account with positive payment history is a good investment in rebuilding your credit score. This will show creditors you are responsible with your finances.
5. Pay down your debts( clear up any collection accounts).
It's easy to lose track of payments, and there may be an overwhelming inclination to close accounts hoping those missed payments will disappear. Unfortunately, they will remain on your credit report. The best way to combat uncertainty is to organize it into manageable portions. Getting yourself on the right track means adopting healthy habits, like setting up payment due date alerts with all your credit cards and loans to get organized. Moving credit card payment due dates on your bank or lender's website to make sure they fit your payment schedule will allow you to properly allot and make payments when due. If you have a long track record of making your payments on time, consider asking your credit card issuer or lender if they can forgive that late payment. By paying down your debts, you show that you are consistent in taking charge of your financial responsibilities.
In following these five steps to rebuilding your credit score after a bankruptcy, you ensure a healthy financial recovery. Life after bankruptcy can be a difficult task. Our Orange County bankruptcy attorneys at Ben Ari & Nyugen Attorneys and Counselors ensure you do not face a bankruptcy alone. From handling your local Orange County bankruptcy to creating effective solutions to assist your debt relief, you can rely on Ben Ari & Nyugen Attorneys and Counselors to protect you and your family.
CONTACT AN ORANGE COUNTY BANKRUPTCY LAWYER
We at Ben Ari & Nyugen Attorneys and Counselors believe that you should not have to choose between paying your bills and supporting your family. By representing both individuals and business, we are your premier Orange County bankruptcy and debt relief attorneys dedicated in helping you free yourself from debt. Our experienced bankruptcy attorneys are dedicated in helping you find the right debt relief solution. With us, you won't face debt settlement alone. Connect with Ben Ari & Nyugen Attorneys and Counselors with a free consultation to discuss your bankruptcy concerns today.