After Bankruptcy - Your Credit Score

You probably know that potential creditors look at your credit history before allowing you credit. Your credit history is rated and your score reflects your financial situation. A low score means your are in poor financial condition, while a high score reflects your excellent financial health. If you are considering bankruptcy, you need to educate yourself about the effects of your bankruptcy filing on your credit score. The task of repairing your credit post-bankruptcy is a painstaking process but it is a necessary one.

While bankruptcy will lower your credit score there are other factors that will damage your score and your credit rating. If you are considering bankruptcy, then it is likely that your present financial situation does include at least some of these factors. Some of these other situations are:

Late payments
Collection activity
Total amount of your outstanding debt
Close to the limit credit card balances
Duration of your credit history

If the above factors have led you to bankruptcy then your credit score s already reduced. Discharge of your debts will lower the score still more> It is true that after bankruptcy there will be a period opf time that you will be living on a cash only basis because you caqnnot get credit. You will have to gradually and conscientiously rebuild your credit.

When you file, if there are any non-discharged debts, you should concentrate your credit repair activity on getting these paid up. Don't make any late payents and allow yourself to fall behind. When you are able to secure a credit card, make sure those payments are made on time. You might think that you should not even get a credit card if you are aware that your credit card activity was what got you into financial difficulty, but it is important to your credit rating to obtain one secured credit card after you file. This should be used ONLY to make small purchases and the bill for those purchases must be paid on time.

It will take time to build a better credit rating but if done slowly, you will recover fully from your bankruptcy. In two to three years, you will be able to apply for small loans. If you can continue your conscientious repayment plan, pay all bills on time, and avoid the pitfalls that led you to bankruptcy in the first place, your buying power will return. There is life after a bankruptcy.

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	All the information, articles, and tools that you need when facing debt and bankruptcy! Tuesday, January, 6th, 2009