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Improving Credit Scores After Bankruptcy

Written by Bruce Feinstein, Esq. on . Posted in Bankruptcy Blog

improving credit scores after bankruptcy

Why are credit scores so important, and how can you improve them after bankruptcy?

Our clients who file for bankruptcy in Queens and throughout New York want to see the future as a place of possibility, and an opportunity to create a new chapter in their lives.  Life after bankruptcy is not a complete reset, but it can be an amazing time to make changes that will get you on the right path toward fiscal responsibility. One such change is understanding the importance of your credit score and knowing how to improve it. There are steps you can take, now and in the future, to ensure a safer financial future.

Keeping a close eye on your credit score is an important habit to have, both before and after filing for bankruptcy. A recent article by Quizzle published in October  2013 shows that 65% of adults never viewed their credit score last year. The same article shows a helpful infographic that illustrates how ignoring your credit score can cost you in the long run. It explains how a lower credit score can result in a higher mortgage rate, costing you tens of thousands of dollars over time. The article also speaks to the importance of checking for errors on your credit report, a topic we talked about in a previous post. Many consumers who filed disputes were able to have their report modified, resulting in a change on their credit score.

So many people think that their credit can’t be fixed, or that filing for bankruptcy will ruin their credit, and that’s simply not the case. The key to controlling your credit is to be diligent about checking your score and take the right steps toward rebuilding it after bankruptcy.

Credit repair companies are often scams that are not worth the time or the money, but getting a copy of your consolidated credit report is a good first step. A consolidates report includes the three major credit reporting agencies in one document, which you can then check for mistakes such as accounts that are not yours or negative information that should have been removed after a certain period of time. This report also show you if you have accounts that are past due, which you should pay as quickly as possible.

Many people tend to worry that if they check their scores they will lose points and negatively affect their score. This is a common misconception. In reality, there are several types of credit inquiries, and not all of them will affect your score. Hard inquiries will remove points from your credit score. These occur when an institution pulls your credit report when determining loan approval for something like a mortgage. Soft inquiries occur when an individual checks his or her own score. So rest assured that you check your score using credit report data from vetted sources that is free and easy to understand.

There are many other ways to improve your credit after Chapter 7 or Chapter 13 bankruptcy. The score is not a some secret number that you have no control over; you can know your credit score and take steps to improve it over time. Some tips include having a mix of credit types such as a secure credit card and a loan that you know you can pay on time and in full. Pair this with a budget that includes contributing to a savings account, which will give you a financial cushion in times of need and give you even more knowledge of your spending and saving habits.

In short, the more you know the better – and this could not be truer when it comes to your credit score. To get more information and tips about improving your credit score when filing for bankruptcy, Contact the Law Offices of Bruce Feinstein, Esq. today for a Free Consultation.

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