After filing bankruptcy, you can fix your credit yourself and get approved for new credit at a lower rate. Some people resort to hiring credit repair companies after a bankruptcy. But instead of paying a monthly fee to help restore your credit, learn ways to improve a low score on your own.
Retain Older Accounts
People filing bankruptcy don't have to include all their outstanding debts in the case. Some choose to retain auto loans and mortgage loans, wherein they agree to satisfy these debts as agreed. Keeping one or more of your existing debts can put you on the path towards repairing credit. These creditors will continue to update your credit report on a monthly basis. And as long as you never skip a payment and pay on time, they'll report positive information that slowly improves your score after bankruptcy.
Open New Accounts
When including all your debts in a bankruptcy, opening a new account is key to repairing credit. You need credit accounts in good standing to fix your bad credit history. Accounts available to people after a bankruptcy include high-interest rate credit cards, secured credit cards and bad credit auto loans. Explore these options and apply for the account that's right for you. Talk to your bank about credit card offers for people with bad credit. Plan to pay extra fees with these accounts such as an annual fee, setup fee or monthly service fee.
Timeliness
Acquiring a new account after bankruptcy isn't enough to fix your credit score. Proper account management helps raise your score. This include organizing your debts and monthly payments, and always paying these accounts on time. Timeliness makes up 35 percent of your credit score. Missing payments or sending late payments causes additional damage and impedes efforts to improve your score.
Debt Management
Paying off credit card balances each month, or keeping balances below 30 percent of the credit limit has a major impact on scoring. Like payment history or timeliness, the amount owed to creditors makes up 30 percent of scoring. Consumers who max out their credit cards increase their risk of having to file bankruptcy again in the future, plus higher debts cause additional damage to credit scores.
0 comments:
Post a Comment