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Bankruptcy and Raising Your Credit Score

Filing for bankruptcy used to have a stigma attached to it, but these days, a filing is so common that few people think about it anymore. Thousands of Americans file for bankruptcy each and every year.

The reasons for a bankruptcy filing can be many - job loss, illness, or just a run of bad luck. U.S. law permits people who can demonstrate that they just can't pay their bills the opportunity to have those financial obligations forgiven in bankruptcy court. Having your debts forgiven is not a cakewalk; there is a price to be paid for getting a new start. The debt relief filing will remain on your credit report for as long as 10 years. The wiped out debts become taxable income.

There are companies that may extend credit to individuals who have just returned from bankruptcy court. Your bank card will cost more than the average card, and you'll be forced to pay higher interest rates, but you can get credit after bankruptcy. Companies do not provide credit to the newly impoverished to be kind; they know that once you return from court, you can't file again for another eight years.

Below are a few suggestions that might help you improve your credit score following a bankruptcy filing:

Acquire the costly bank cards when you can get them and use them with care; you may not have any other choice. Make regular purchases and pay the bill promptly. Submit your payment in full if you can, so that you won't have to pay the outrageous interest rates that you will undoubtedly be charged.

Ask for a higher limit. Credit bureaus use something called a debt-to-credit ratio when determining a credit 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 total limit. Your FICO score is determined, in part, on the amount of purchasing power at your disposal. An increase in your available credit limit can help that right away. The higher your limit, the more favorable your ratio.

Obtain a major credit card. The large, national banks aren't going to approve you for an account right now; you'll have to begin with high interest cards from lesser-known banks. An account from Citibank can help your FICO score more than an account from Bank on the Corner. When you can, you ought to apply for credit card accounts from larger providers, as they tend to carry more 'weight" with the bureaus.

Reestablishing financial competence takes time and effort, but over a period of time, you can do it. It's quite a task recovering from personal bankruptcy, but it can be done.

©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.

This article is free for republishing
Source: http://www.articlealley.com/article_145069_19.html

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