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A credit score is something that needs a steep recovery once the bankruptcy is completed. Whether chapter 7 or chapter 13 bankruptcy, credit score can have effects of bankruptcy seen for several years. The impact on credit score can be for 10 years for chapter 7 and 7 years for chapter 13. Log on to https://recoverylawgroup.com/bankruptcy/ to learn more about the impact of bankruptcy on credit score.
How much credit score is enough?
A figure of 700 is a great score to attain especially after a bankruptcy. The number 700 opens several low-cost credit opportunities which are otherwise difficult to avail of. The benefits of 700 can be listed as follows-
- Better employment opportunities
- Easier eligibility for car loans and home loans
- Lesser cost for a car insurance
- The lower interest rate on any form of eligible credit
What do you do to get to 700?
700 is the magic number and many people end up spending quite some dollars to increase their scores. However, you can preserve all those dollars as we are going to give you some free tips below-
- Apply for a secured credit card
After bankruptcy, there is a high probability you might not be eligible for a credit card for quite some time. Hence, the only kind of credit you can avail of is a secured credit card. For this, you will have to provide a lien or mortgage an asset to avail yourself of some credit line. By default, this transaction should be reported to all the credit unions. However, if your lender seeks your consent for the same, please grant the same.
- Pay before time and consistently
Once you have availed a secured credit card, it might have a security deposit of an ‘x’ amount which might be used as a buffer to recover delayed payments. To improve the credit score, it is essential to never go into the ‘x’ amount territory and try to pay all the dues a few days earlier than the due date.
- Using the credit limit of the credit cards
It is important to understand that credit cards are debt traps, and they should never be used at full capacity. The ideal way is to use not more than half of the allotted credit limit. Once, a secured credit card is utilized for 3-4 months for half the limit and the payments are made promptly before the due date, there is a chance of being eligible for another credit card that could be secured or unsecured.
The goal is to have the same process repeated for 3 credit cards over a period of 12 months
The process of availing of a credit card preferably from different lenders should be repeated to reach 3 credit cards. Paying the debts early promptly, utilizing not more than 50% of the credit, and make sure you do not miss or default on any payments. If this process is carried out for 12 months, a bankruptcy filer can attain a score of 700 within 12 months of discharge.
If you are Los Angeles & Dallas, TX resident, dial 888-297-6203 to avail professional services from the experts instantly.