October 21st, 2012, 8:52 am
After one files for bankruptcy, and receives a discharge of debt, you will find yourself in a unique position to quickly improve your credit score. In fact, the are Federal mortgage programs that allow a Debtor to get a new home mortgage as soon as 2 years after they file for bankruptcy. However, you need to repair your credit not just from the bankruptcy, but also the long history you had which put you in that position to begin with.You need to ensure that your use of credit and payment history meets the standard expectations. That is , ensure that the amount of credit you are using in total is less then 30% of the total credit at your disposal. For example, if you have a credit card with a $2,000 limit on it, you should not carry a balance over $600. Additionally, when a bill is due, make sure to pay it on time. If you are going to be late, ensure that your payment is posted to the Creditor no later then 29 days from the date it is due. Finally, only apply for credit you actually need. The more times you apply for credit, the lower your actual score becomes. Each time someone runs your credit, the FICO score drops a few points.
The next step to repair your credit is to ensure that your personal financial history is being reported accurately. You have a right to request your credit report for free once a year. Each year, you should do this and review the report in detail. Look for any negative comments, such as 30, 60 or 90 days late, or balances on credit cards that is not accurate, or even creditors claiming you owe money you do not owe. If you find any of these, go to the credit agency’s website and file a dispute. If you can provide documentary evidence to support your dispute that will greatly help. Once you do this, the Creditor has the burden of demonstrating the report is accurate and if they can not, the negative information must be stricken from your credit report.
Remember, that credit is a living breathing thing, so just because you fix it once, does not mean you can forget about it. Pay close attention and follow these steps and you will have great credit for life.