Bankruptcy can have a huge adverse effect over your credit score. It damages your credit reputation and makes individual creditors and lending institutions think twice before granting you a loan.
Unfortunately, filing for bankruptcy is a bitter pill that many Americans should swallow especially in today’s tough economic times. Bankruptcy is necessary in order to protect one’s self and one’s reasonably exempted properties from aggressive creditors.
In addition, it is important that you slowly rebuild your credit score after you’ve filed for bankruptcy. You should make a consistent effort to reestablish the creditors’ confidence upon your capacity and willingness to meet financial obligations.
Financial experts often advise bankrupt individuals to check their credit report for any errors or lapses that negatively impacts their credit score.
Eliminating erroneous calculations and errors can rapidly improve your credit score. Nevertheless, correcting errors can only be done through a bank or a mortgage company and requires proper paperwork.
In the United States, there are three nationwide credit reporting companies namely Equifax, Experian, and Trans Union. Under the Fair Credit Reporting Act (FCRA) you can access a free copy of your credit report from any of those three companies.
You should request and study your latest credit report in order for you get a more accurate idea of where you stand when it comes to your finances and credit reputation.
Another way to improve your credit score is by opening a bank savings deposit. A bank savings deposit is not only beneficial to your credit score but also to your long-term personal finances. You should save at least 10 percent of your monthly paycheck so that you can meet other long-term obligations that are foreseeable at present.
You can also use your savings deposit for applying in automatic debit arrangements with credit card companies and other lending institutions. After bankruptcy, it is necessary that you pay your bills on time; thus automatic debit arrangements can help you achieve an on time payment system.
You can also improve your credit score by applying for a new credit card, preferably a secured credit card. A common mistake made by bankrupted individuals is closing their credit card accounts without knowing that closing a credit card has a negative impact on credit score and reputation.
Bankruptcy isn’t the end of your credit and financial reputation. Moreover, it gives you an opportunity to start all over and improve your financial standing.