Bankruptcy Credit Repair
One of the biggest challenges you’ll have post-bankruptcy is getting credit extended to you. But for most people post-bankruptcy, it’s not that they can’t get credit; it’s that they can’t get credit worth having. The cost of credit extended to people after bankruptcy is just too expensive. This is why post-bankruptcy credit repair is so important.
There are things you can do to improve the credit offers you receive after you’ve filed for bankruptcy. The higher your credit score the more appealing you are to creditors and the better offers they’ll provide you.
This means that if you want to buy a car or get a mortgage on a home or even open a credit card, you’ll be able to do so for less money than someone with a lower credit score.
Understanding Your Credit Score
Credit scores typically fall into one of a few ranges: excellent, good, fair, or poor. Adding just a few points to your score can take you from one category to another, which can have a significant impact on the credit offers extended to you. Adding as much as 100 points could have a dramatic effect on your credit offers.
But how do you add points to your credit score?
There are a few strategies you’ll want to employ post-bankruptcy to make sure your credit score heads in the right direction. These tips can also help even if you haven’t filed for bankruptcy or if your bankruptcy was many years ago.
1. Pay Your Bills on Time
The most important thing you can do if you want to enhance post bankruptcy credit repair is to make sure you pay your bills on time. None of the tricks and tips to raise your credit score will help unless you are making your minimum payments by their due dates.
Can you fix the problem if you happen to make a payment late?
Maybe. It depends on how far past due you are. Creditors don’t report anything until you are at least 30 days past due on a payment. If you realize you missed a payment that was due 30 or more days ago, contact the creditor immediately and arrange to get the account up to date. Also, ask if they will consider not reporting the missed payment to the credit bureaus.
Regardless of how the creditor chooses to handle the situation, you need to get the account up to date as soon as possible. Every passing month of missed payments hurts your credit score.
2. Make Multiple Payments
In addition to making sure an account stays up-to-date by paying on time, you can further achieve post bankruptcy credit repair by making additional payments throughout the month.
These extra payments can be small– just $10 or $20 – or you can make a payment each time you make a purchase. Multiple payments throughout the month help you with credit utilization, which can affect your credit score dramatically.
3. Request a Limit Increase
It might seem counterintuitive to have more credit when you are trying to keep things under control. But having more unused credit is actually beneficial. The key here is that the credit needs to be unused.
Higher credit limits and decreasing balances lower your credit utilization which improves your overall score. Creditors are looking for people with access to credit, which is different than credit in use. The more credit you could use but choose not to the better.
When you request a limit, make sure you ask if it can be done without a hard credit inquiry. This tends to lower your score by a few points.
Nowhere to Go But Up with Post Bankruptcy Credit Repair
The good news about having a low credit score is that there is more room to make gains. It’s possible for someone with a low score who follows these tips to see an increase of 100 points or more within a moderate time-frame.
In addition to the three steps listed above, also consider the following to improve your credit score:
- Review your reports from all three major credit bureaus and dispute any errors
- Keep credit cards open even if you are not using them
- Make sure you have both installment and revolving types of credit – if most of your credit is linked to loans, consider opening a credit card or vice versa (You can learn more about the difference between installment credit and revolving credit in this article from Investopedia.
If you’d like to learn more about post bankruptcy credit repair or you have questions about your financial situation in general, contact the Law Office of Robert M. Geller at 813-254-5696 to discuss your situation.