Did you know, you can easily increase your FICO score even after going bankrupt? In fact, you can even go ahead and purchase a house in 2-3 years. Here are 5 techniques to rebuild your credit score after filing for bankruptcy.
- Think about using a secured credit card
Several major banks provide customers with secured credit cards to build or rebuild credit scores. In this type of credit card, you are required to deposit the funds in your account equal to your desired credit limit. These funds will be held by the bank as security for your credit card. The rules and regulations of this credit card are the same as the normal ones. Your on-time repayment of the credit card will increase your FICO score.
A major tip about this credit card –
The credit usage ratio should always be maintained. If you have $2000 on your credit card always keep $600 in your card as a balance that is, 30 % of the total amount. This helps in rebuilding your score.
- Reaffirming debts after liquidation
Reaffirmed debts are debts that the debtor keeps on repaying even after filing for bankruptcy. House mortgages and/or car loans are common. It can be only done after entering the reaffirmation agreement. The term of the debt is the same as it was before bankruptcy. If you make on-time repayments then the credit score will automatically increase as the creditor has to report to credit reporting bureaus about the payment. It can have a tremendous effect on your credit score.
One disadvantage to reaffirming a debt is assuming you later default, the creditor will seek all available collection efforts and legal remedies against you irrespective of your bankruptcy discharge.
- Become an authorized user –
The authorized user plan will require someone with responsible credit history on a quality bank account to assign you as an authorized user. The user has access to utilize the credit extension while the first debtor stays answerable for the account. The authorized user benefits from the on-time installments that are currently reported on his credit report in addition to the first debtor. The disadvantage to this plan is that your credit can likewise be harmed assuming the first indebted person makes late installments on the record or becomes delinquent.
- Repair your credit-
A study revealed that 1 out of 5 people make mistakes in their credit reports. Always keep a track of your credit report because even 1 can cause a great difference.
Sometimes contacting the creditor about the error can solve the problem quickly, while at other times you might have to dispute with the credit reporting agency. There is a must to provide proof of the mistake to the agency.
- Car loan –
Many finance companies are ready to provide financing opportunities to a person who had recently filed for bankruptcy to buy a new or used car. One disadvantage to this, is the interest rates and terms are not very favorable to some people, but making on-time repayments impacts your FICO score tremendously.
These are a few quick techniques for rebuilding your FICO score after filing for bankruptcy.
For more details, you can visit – Recovery Law Group or call us at (888-297-6203).