Many people believe that once they have declared bankruptcy, they will never again have a “good” credit rating. This is a myth.
A debtor’s credit rating can be hit with as much as a 100-point deduction. However, the credit rating does not need to stay at the same low level for the ten years that the bankruptcy will be on record. There are a number of ways to regain points, even after bankruptcy. It just takes time, patience and some effort. As incredible as it may sound, a debtor may even start to rebuild their credit rating the day after it has been discharged. A good Iowa bankruptcy lawyer may advise their client of this during their consultations.
The first thing a debtor needs to do is to get a copy of their credit report and carefully go over it. Credit reporting agencies do not always have accurate information. Even though a bankruptcy lowers your credit rating, you may find out that there are other inaccurate or expired pieces of information you may be able to have removed, and when removed will increase your score. If you do find things that don’t add up, you should dispute them. To do so, check each credit reporting agencies website for details on how to file a dispute.
Even immediately after getting discharged from your bankruptcy, you may apply for a new credit card. While most of your credit cards may have been included in your bankruptcy process, you are likely to still qualify for either a secured or unsecured credit card. The rates are higher and the limit will be lower than before, but a new card is a good place to begin building our rating back up. Stick with one or two cards, manage your purchases carefully, and don’t overspend. You want to prove that you are a responsible creditor. If you have any questions, speak to an experienced Iowa bankruptcy lawyer.
Remember to keep your credit card balance low. This is because your credit score keeps track of the amount of debt you are carrying, your payments and the amount of credit available to you. It is a smart move to try to keep your debt load at about ten percent of your total available credit. Let’s say your available credit is $15,000. You would want to keep your purchases around $1,500, and pay it off promptly each month. Paying in full on time is an effective tactic to increase your credit score. Make a solid effort to pay all of your bills in full. Keep track of when your payments are due and pay them on time or even ahead of time. This looks good in your credit report and over time, your score will improve. This tactic will also take some time to show up in your credit score, so keep consistently paying your bills.