The Keys to Credit Repair and Bankruptcy

Credit Repair and Bankruptcy

Credit Repair and Bankruptcy Are Common Concerns

Perfect credit is the goal of many people who work hard at managing their money and credit. And if you ask people, many will tell you they would be happy with good credit. At some point, the difference between good and perfect credit may be the amount of savings on monthly payments. However, if someone has bad credit, they might not be extended the opportunity to borrow money and have payments. For many people, good credit is necessary to buy a car, a home, and have credit cards to finance household needs and emergencies.

Credit scores affect all kinds of things from auto insurance rates to the percentage interest paid on loans and credit cards. Renting a home also requires good credit, the absence of which might require a more significant security deposit. Employment decisions can also be impacted by credit.

While many factors affect individual credit scores, it can be easier to start with three elements of a good credit foundation. By developing three strong credit repair habits, it becomes easier to repair damaged credit. First, paying bills on time is essential to positive credit. Second, the amount of available credit used is an important credit score factor. The third credit repair element is monitoring all the factors that affect credit scores.

Chicago Bankruptcy lawyer Joseph Wrobel helps clients learn all about bankruptcy and how they can get a fresh financial start, which includes credit repair. See our Bankruptcy Blogger page for all kinds of bankruptcy resources articles with information about what to expect.

Credit Scores Affect Rates, Payments, the Ability to Borrow Money and Get Certain Jobs

There are so many services and utilities we pay, and our rates can be determined by our credit scores. Credit scores affect daily life. People with higher credit scores qualify for lower interest rates and can borrow money easier. Good credit helps job applicants obtain certain positions where a good credit rating is a requirement for an offer of employment.

Getting a cell phone, renting an apartment, and getting approved for certain utilities can be more expensive for people who do not have good credit because security deposits may be required. However, even when someone’s credit is challenged immediately after a bankruptcy filing hits their credit, they always get approved for renting an apartment or home but might be required to pay a significant deposit or several months of rent upfront.

Always Being on Time Paying Bills, Credit Cards, and Loan Payments

Timely payments on all bills, from the smallest to the largest, are important when working on credit repair, especially after a bankruptcy. Using a calendar on the computer, and setting advanced payment reminders, can help anyone budget their income to make sure that everything is paid on time. Some people use separate accounts for paying bills and making sure that nothing affects the balance in the account, so the bills are always paid on time.

In most cases, an individual working in a lending capacity will be the one reviewing credit scores when it comes time to apply for auto financing and home loans. Meanwhile, credit card approvals are usually determined by computer software. At credit unions, borrowing money can be easier when the applicant can show their consistent on-time bill payments which shows positive financial responsibility, especially after a bankruptcy.

Always be aware that different companies report to the credit bureaus at different times. Especially with credit cards, make sure to know when to pay towards the balance due so that the snapshot of how much available credit is being used, is what gets reported to the credit bureaus.

How Much Available Credit Should Be Used When Working on Credit Repair?

The amount of available credit used, or utilization is a common issue to discuss with a mortgage broker when applying to finance a new or used home. Many credit repair professionals recommend not using more than 10 or 15 to not more than 30 percent of the available credit on any credit card or approved line of credit.

This is the exciting part of credit rebuilding; it does not take a fortune. The goal is to demonstrate a consistent record of timely payments and favorable credit usage. Some people rebuilding their credit by using secured credit cards will pay a small bill on that card every month and never let the bill get too high and staying within the good zone of how much credit should be used when working on credit repair.

Managing Factors Affecting Credit Scores: What to Track and Monitor

There are five main factors affecting credit scores: 1) payment history; 2) amount of debt based on available credit; 3) age of credit history; 4) types of credit accounts, and 5) fresh new credit checks.

When starting a credit repair process, with a new secured credit card and a used car loan, expect to receive credit offers for credit cards to pre-approved home and car loans. When growing credit, a good rule is to go slow and steady. Apply for a few credit cards including retail store credit cards and buy a few things and pay bills promptly without carrying large balances. After time credit lines increase and more offers become available. Keep track of all the main factors affecting credit scores while building credit and always use a credit monitoring service that will share much of the information affecting the scores over time.

CNBC: The Best Credit Monitoring Services of May 2021

How Long Does Credit Repair Take After Bankruptcy?

Determining how long it takes to repair credit scores after bankruptcy depends on the definition of repair. Is good credit considered repaired credit, or does the credit score need to be perfect? The people who take advantage of bankruptcy laws are usually interested in learning how long it will take before they can qualify for a home mortgage after bankruptcy. Every credit user has their score affected by decisions and life events. While it can take some people 18 to 24 months to get a home loan, others may need 36 to 48 months to qualify for an approved amount.

But even quicker than it takes to get a home loan, credit repair can start immediately with a secured credit card. Just a few hundred dollars and an online application can get the credit repair process underway with a new secured credit card. Establishing positive credit card use can quickly lead to conventional credit card offers. And if a new or used car is on the to-do list, the good news is that within six to 12 months, most people in credit repair can get a vehicle loan.

Learn more in this article: How to Buy a Car After Bankruptcy

Get a Fresh Start with Chicago Bankruptcy and Learn Why Credit Repair and Bankruptcy Are Common Concerns, Call Joseph Wrobel, Ltd. in Chicago to Get Started Today (312) 781-0996

Leave a Reply

Your email address will not be published. Required fields are marked *