How Do I Improve My Credit Score After Bankruptcy?

There are, In essence, two ways a person can file for bankruptcy and those two ways consist of getting rid of all the debt completely or paying some of it back. Chapter 7 bankruptcy is where nothing is repaid and Chapter 13 is where some is repaid. Either way a person looks at it, bankruptcy will impact a credit score quite negatively. These impacts will in most cases last on a credit report for 10 years. But how does a person who has a bankruptcy on their credit report help improve it? This is what we will discuss here.
First, no matter how you look at it; it will be extremely difficult to obtain any financing following a bankruptcy right after it occurs. But that does not mean a person cannot begin building their credit back up while the effects of a bankruptcy are in full effect on a credit report. One major way a credit score can be improved is through secured lines of credit.
Secured lines of credit are simply where the creditor will allow a credit account to be active, even after bankruptcy, provided that the maximum credit amount is backed up 100% by your own funds. So if you want a $5,000 credit line, you will have to deposit $5,000. This is simply to eliminate the risk to the lender that any more default of delinquent payments will occur. This is a great opportunity for those who need to build their credit back up while providing that creditor a lower amount of risk. Over time this will help improve a credit score substantially after many payments on the accounts have been made.
After a couple years, many of those who had filed for bankruptcy will be eligible to apply for another loan such as a mortgage. If that person has been working on improving their credit score over the years, then that improvement will surely show on their report which will help their chances substantially. There are no guarantees, however, especially after a situation such as bankruptcy, but it does show that the person is making a good, honest effort to improve.
Granted, in this type of situation such as bankruptcy, there will always be repercussions to that negative impact on your credit score as it will usually result in higher down payments and such. The ramifications of a bankruptcy are really never actually eliminated completely from a person's record so it is very important to reconsider one's options if they are considering declaring bankruptcy, especially if they are planning to declare a Chapter 7 bankruptcy where they decide not to pay ANYTHING back at all.
Overall, the best way to improve one's chances of having a much harder time in the financial world is to work on preventing the situation all together. One way that many keep their credit in line is through monthly monitoring of their credit through services offered by Experian and other credit monitoring companies which can be seen in more detailed at our website. If a person monitors their credit often and prevents decisions which could compromise their credit in the future such as with mortgages higher than they can afford, the rewards will be much greater when the time comes when such items become necessities. There are many other ways a person can help avoid the problems associated with a bankruptcy before it happens through services such as debt settlement or even making an appointment with a legit credit consolidation professional whose job it is to help you get out of any financial jams that you may currently be in. If it has already been established, then just focus on making payments and improving that score over time.
S. Michael Windsor is currently publisher and a writer for myCreditScoreNetwork.com. The MCN Online FICO Credit Score Guide is a premier FICO score and credit report information platform that provides individuals with a quality in-depth look at credit scores and reports and the associated products, services and information available today. Visit us today at http://www.myCreditScoreNetwork.com and subscribe to our FREE Member services.
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