If your credit score is less than ideal, you’re not alone. Over the past five years, millions of Americans have suffered from low FICO scores due to unexpected illness or accident, job loss, real estate issues or high credit card debt. Your FICO score will not improve unless you take some positive steps to rebuild your credit:
- Review your credit report for errors. You are entitled to receive one free copy of your credit report from Equifax, Experian and TransUnion every year. Review your reports to make certain that they are accurate – post-bankruptcy, all debts should be noted as discharged. Challenge errors.
- Spend wisely. 80% of today’s bankruptcies are filed due to high medical bills after an illness or injury, unemployment and/or divorce, and not because of poor spending habits. Right after a bankruptcy is an ideal time to create a new family budget and financial plan.
- Pay your bills on time. Your payment history is one of the most important factors in the calculation of your credit score. To make sure that your bills are all paid on time, set reminders on your calendar or automatic payments with your bank.
- Obtain new credit. A good way to rebuild your credit and to keep a lid on your spending and fees is to obtain a secured card that allows you to spend up to a predetermined amount on deposit at your bank. In addition, a car loan can also help to re-build your credit score – keep it low for easier payoff.
- File for bankruptcy. This may sound strange, but in many circumstances bankruptcy is an ideal first step to improving your credit. Although a bankruptcy may appear on your credit report for up to 10 years, creditors know that you will not be eligible to file bankruptcy again for another eight years, so you are a good credit risk for the time being.
With careful planning and determination, credit scores are not that difficult to restore. You may be surprised by how quickly your credit rating – and your life –improves after a bankruptcy. Call our office today for a consultation.