Your credit report after a bankruptcy will look like a bomb was dropped on it. Your credit score report will be littered with all kinds of derogatory information. Depending on what type of bankruptcy you filed will determine how long it will take to re-establish your credit. The two most common bankruptcies are Chapter 7 and Chapter 13. With the new bankruptcy law, more people will be forced to file Chapter 13. Here are the differences.
Chapter 7 bankruptcy- is considered liquidation of your non-exempt assets. This bankruptcy is considered the quickest and simplest of all bankruptcies. A court appointed trustee sells off all your assets in an attempt to pay back some of your creditors. During most Chapter 7 bankruptcies the client will not have any assets to liquidate.
Chapter 13 - This bankruptcy is considered a wage earner plan. This plan allows individuals whom have income to develop a plan to pay back there creditors over a 3 to 5 year period. Under this bankruptcy you are assigned a court appointed trustee that you make the agreed upon payments to, which they in return pay your creditors.
Bankruptcy is all too common these days with the economy the way it is. The mortgage crisis and the price of gas have caused many people financial troubles all over the United States. Luckily there is hope after a bankruptcy. It's kind of like polishing up your shoes after you have got some scuff marks on them. Your credit is the same way, you can re-establish credit after a bankruptcy, and that is the first step once you are done with your bankruptcy.
How to establish credit afterwards The first step is to get two secured credit cards. No bank is going to allow you to get an un-secured credit card after a bankruptcy. All of your past credit will be on your credit report for 7 years. If you filed chapter 7, it will be on your credit report for 10yrs from file date. But most of your past negative credit will be on your report for 7 yrs. The main objective is to get new credit on your report as soon as possible. The only way to do that is with secured credit cards, and Orchard bank is a great one. FICO likes to see a mix of credit, so make sure you get a couple of secured credit cards. This process will take you at least 12 to 24 months to get your credit scores where they are somewhat decent. After a little time with no slow pays, your creditors will start extending credit to you again.
Don't be a repeat offender FICO will forgive you for past bad credit mistakes, but if you are a repeat offender it will be tough to recover. The new FICO scoring process does not want to see you continually having problems. So learn from past mistakes, save your money for hard times and emergencies. Also remember to always stay ontop of your free credit score report
If you have bad credit are not really sure if your credit score is good or bad, you should get a copy of your credit score. The average person will have to get a copy of their credit report sooner or later if they want to get pre approved for a mortgage loan or a car loan. Getting a copy of your credit report can mean the difference between you getting approved or rejected. So many people these days do not think to check their credit report they try to get a loan and that can be a big mistake, and quite an embarrassing one at that. Your credit report will be able to keep you fully informed with how your credit stands.
An excellent credit report has a credit score that is between 700 and 800 which is the where your credit score starts. The average has a score of 650 and lower. These low credit scores are what keep many people from getting approved for credit cards, mortgage loans can car loans. If you are planning to own your own home one day, this can be a real problem. Smart people will get a copy of their credit report before they even seek a loan of any kind so that they can correct any mistakes that are made or so that they pay off some of the debts that are listed. Doing this before you seek credit can change the outcome of the application.
If you are interested in getting a copy of your credit report you can go to http://www.equifax.com for a complete copy, or any other website that will let your get you credit report. You can get a copy of your credit report from thousands of different online resources or you can get one directly from the government instead. Some websites will give you a free copy of your credit report for even more convenience, but many of the free copies are inaccurate or not detailed enough to fully understand them. It is best to pay for a copy of your credit report because at least then you can rest assured that the information is correct. Equifax will sell you a copy but it is also a trusted resource for credit reports.
Your credit report will be your best weapon in making sure that your credit stays good before you have to worry about being bankrupt. The best defense against declaring bankruptcy is to keep your credit in good standing in the first place. Having a copy of your credit report is the best place to start because you can correct any errors and know exactly where you stand and then fix it.
Both Mike Clover & Brandon C. Hall are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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