Bankruptcy and Raising Your Credit Score
By: Charles Essmeier | Posted: 07th April 2007
Thousands of Americans file for bankruptcy each year. Filing for bankruptcy once had a stigma attached to it, but these days, a filing is so common that few people think about it anymore.
The reasons for filing for bankruptcy can be many - joblessness, illness or injury, or simply a run of bad luck. Federal law permits individuals who can demonstrate that they simply cannot pay their bills the opportunity to have those debts forgiven in bankruptcy court. Having your outstanding debts forgiven is not necessarily easy; one must pay a price for getting a new start. The wiped out bills must be treated as taxable income. The bankruptcy filing will stay on your credit report for up to 10 years.
There are companies that may advertise credit to consumers who have just returned from a bankruptcy filing. These companies don't provide credit to the newly bankrupt out of kindness; they realize that once you emerge from court, you can't file again for another eight years. Your credit card will be more expensive than the average card, and you'll be forced to pay greater interest rates, but you can get a credit card after a bankruptcy filing.
Below are several tips that may help you boost your credit score after personal bankruptcy:
Obtain a major credit card. When you can, you should submit an application for cards from larger banks, as they have a tendency to carry more 'weight" with the credit bureaus. A credit card from Citibank can help your score more than an account from Bank on the Corner. The big banks are not going to offer you an account right away; you'll have to begin with expensive accounts from lesser-known financial institutions.
Ask for a higher limit. Credit bureaus use something called a debt-to-credit ratio when establishing a score, measuring how much debt you have when compared to how much you can potentially owe. Ideally, you want to owe as little as possible when contrasted with your available limit. Your FICO score is determined, in part, on the amount of purchasing power available to you. The greater your limit, the better your ratio. An adjustment in your limit can contribute to that almost immediately.
Acquire the expensive bank cards when they are offered and use them responsibly; you may have little other option. Make frequent purchases and pay the bill on time. Submit your payment in full if you can, so that you will not have to pay the outrageous interest rates that you will undoubtedly be charged.
It can be tough recovering from bankruptcy, but it is possible. Reestablishing financial responsibility takes time and effort, but over a period of time, you can do it.
©Copyright 2007 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing , a firm devoted to informational Websites, including The-Debt-Consolidator.com, a site about debt consolidation and bankruptcy, credit counseling, and payday loans.
About the Author
Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including End-Your-Debt.com, a site devoted to
debt consolidation, credit counseling, payday loans and personal bankruptcy and HomeEquityHelp.net, a site devoted to mortgages and
home equity loans.
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Tags: bad luck, tendency, 10 years, kindness, credit score, credit bureaus, credit report, interest rates, financial institutions, personal bankruptcy, bankruptcy filing, bankruptcy court, fico score, citibank, taxable income, outstanding debts, stigma, filing for bankruptcy, credit ratio, joblessness