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Credit Repair after Bankruptcy

By Janet Lacey
Published: Wednesday, October 10th, 2012

Repairing credit is not as easy a task as it has been advertised. You should remember that you cannot increase 300 points in a matter of time. It takes a lot of work and patience to get that. But, putting in the right tactics it is usually possible. Here are a few tips or pointers that will help you take the right path in repairing credit after bankruptcy.

Examining Credit Reports:

As per government norms, annual credit reports are issued for free for everyone. But, to buy further reports, you will have to spend some money with any of the 3 credit bureaus, namely; Equifax, Experian or Trans Union. If you can afford to buy all 3 credit reports and compare, even better. In the process of bankruptcy filing the items that were discharged or included should be modified in the report. If there are any information that show as ‘pending dues’, it should be included in the bankruptcy section of the report and removed from the current details.  They should be done by sending a formal mail to the bureaus.

The Credit Bureaus:

In general, a bankruptcy attorney sends in a notification to the bureaus regarding bankruptcy filing. A request to make a post-discharge modification is also sent. Regular follow-ups with the bureaus should be done to check if the modification has taken effect. You might even have to send reminders to the bureau till the work gets done.

Correcting Credit Score:

This is not an easy task, but it is achievable with a little patience. You can begin with secured credit cards. You can easily get these cards and they improve your credit score when used rightly. The FICO score is designed in a way that you get more points if you open a new account and use them wisely rather than managing the old credit cards that didn’t go into your bankruptcy section. Pay extra attention to your spending habits using a new credit card and pay them on time, every time.

One of the most important step is to ensure that the credit card or any accounts that are opened be maintained properly to get maximum scores. The balance should always be kept in a certain range and never should the card being utilised to its limits. In general, less than 20% usage will boost your credit score. As soon as the bankruptcy work is done, open up new accounts and get new credit cards. Remember, shopping around will increase the inquiries and result in bad credit score. Speak to the bank where they are ready to issue a credit card and then apply with them.

Good credit card maintenance for about a year has the capacity to increase your points, by 100 to 150. So a couple of cards should help you easily reach a score of about 600 even if you have a credit score of 300. In less than 2 years there are possibilities that you can even take your score up to 700 and above. The key to repairing credit score is, maintaining the balance range, paying up the bills on time and never utilising the credit card above 20% of its limit.

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