Your Credit Report
Fix Errors And Improve Credit Reporting
A credit report is a history of money you have borrowed and your repayment history. What is on your credit report is very important. In fact, you can potentially be paying 30% more in interest rates per month if you have a bad credit score. The good news is that you can avoid being negatively affected by fixing errors that appear on your credit report.
Successfully discharging debts that you are unable to repay by filing bankruptcy is often the first step to improving your credit, but it may have a negative impact on your credit score in the short-term. However, filing bankruptcy is often the only realistic way to eliminate these debts so you can begin the process of rebuilding your credit. Your bankruptcy will stay on your credit report for up to ten years, but you are able to start rebuilding your credit immediately. The reality is that most people who need to file bankruptcy already have bad credit and a bankruptcy is often the best course of action.
Credit Reports After Bankruptcy
After your bankruptcy is discharged, your credit report will be updated to show “included in bankruptcy.” However, the accounts will not be deleted from your credit report. Your credit history remains, but now reflect a zero balance on any debts that were discharged in your bankruptcy. Assuming you have income, you should be more creditworthy after a bankruptcy than you were before since your debt-to-income ratio will be significantly improved.
Ask yourself if you would rather lend money to somebody who is debt free, but had to file bankruptcy or somebody who has thousands of dollars of outstanding debt they are unable to repay. The person with a lot of outstanding debt presents a much higher risk to file bankruptcy in the future and not be able to repay you. The person who has filed bankruptcy and eliminated a lot of their outstanding debts will now be in a much better situation to repay you. Creditors are also aware of this and people are often surprised to receive many offers for new credit specifically targeted to people who have recently filed bankruptcy.
Fixing Your Credit Report after Bankruptcy?
Various federal credit laws (specifically the Fair Credit Reporting Act) entitle you to an accurate credit report.If the reporting agency can’t verify the accuracy of the information, they must remove it.It is the duty of the creditors included in your bankruptcy to accurately report that the debt was discharged in the bankruptcy, but unfortunately it is rare for all the creditors to do this, and debts that were discharged in your bankruptcy often do not show as discharged and zero balance.
The first step to correcting this is to review your credit report for inaccuracies.To order a copy of your credit report, visit annualcreditreport.com or call 1-877-322-8228.
Once you have identified any inaccuracies, the next step is to file a request for investigation with each credit reporting agency identifying each correction needed and the reasons that support your dispute for that item. The three major credit bureaus are Equifax, Experian and TransUnion and the dispute can be made online. Once the credit reporting agencies have received your dispute, it must delete the items from your credit report within three days or open an investigation regarding the disputed information. This investigation can take up to 45 days to complete and the bureaus may request additional information from you.
How to Rebuild Your Credit after Bankruptcy
- Establish Good Financial Habits. The best way to manage your finances is budgeting. Use Debt Advisors budget worksheet to create your own budget. Ideally, your initial goal should be saving up an emergency fund so you can stick with your budget if there’s an unexpected bill or expense.
- Apply for New Credit. The best way to improve your credit is to obtain new credit and pay off the balances each month. You may have to start with a secured credit card or loans with slightly higher rates, but each loan you repay on time will help with your credit score.
- Use Your New Credit Wisely. Avoid delinquencies, late payments, or other factors that would negatively effect your credit.
- Ask about our 720 Credit Score Program.
Top 5 Common Credit Repair FAQs
- How Does My Low Credit Score Negatively Affect Me? – If you have a poor credit score, every day of your life can see the effects. Whether you are paying higher mortgage or auto interest rates, cannot get a decent rate on a loan from a bank, or are being asked to pay a higher security deposit at your utility company, your credit score matters.
- How Long Do Negative Items Stay On My Credit Report? – A bankruptcy filing will appear on your credit for up to 10 years.
- How Long Does Credit Repair Take? – Even though we get asked this question all the time there is unfortunately no clear answer. The timeline will depend solely on your specific situation.
- Can I Have My Credit Repaired after Bankruptcy? The short answer to this question is “yes!” Filing bankruptcy can be stressful in and of itself, but think about how much more stress you would have if after your bankruptcy you were still dealing with credit report issues.
- How Much Will Credit Repair Cost Me? –Typically you will be able to fix your credit at no cost.