How To Raise Your Credit Score After A Bankruptcy

Posted by Nick Niesen on October 29th, 2010

Gone are the days when bankruptcy was considered to be a taboo; nowadays filing for bankruptcy is quite a commonplace phenomenon. Without giving it as much as a thought, many thousands of Americans are facing bankruptcy each and every year.

Common Causes of Bankruptcy

There are many reasons that can precipitate a bankruptcy. It could happen due to loss of work, sickness or simply if there has been a dwindling of the monetary resources. US federal laws are lenient with people who are not in a position to make their debt payments. Such people are given the opportunity to have their debts forgiven. However, getting a bankruptcy is not such a good idea after all. The blemish of the bankruptcy continues on the credit report for as many as ten years. And, all the bills that have been voided by the bankruptcy are added as taxable income.

Though generally is not easy for someone who has become bankrupt to get another loan, there are some credit card companies that will provide them with charge cards. Every lender goes through the previous records of payments of your accounts, and will never risk its money on person who is already in a lot of debt. In fact, credit card companies have very little to lose by extending credit to a person who has recently become bankrupt. The reason for this is, once a person has acquired the bankruptcy, he or she cannot file for another bankruptcy for the next eight years. Even the credit given will be at a higher rate of interest because it will be a high-risk loan for the credit card company. But the main point is credit is available after a bankruptcy.

Ways of Improving Credit Score

A better idea is to improve your credit score so that you can become eligible for a bigger loan. The following are some ways to do this:-

Try to get a card with higher credit limit. It will not be an easy task to do with your bankrupt status, but you must note that big banks also have bigger clout on the credit rating companies. Smaller banks will give you high-interest credit cards easily, but that would not do as much for your credit rating as a card from a big bank. For example, an account from Citibank can increase your score more than a bank that has lesser credibility than this one. Bigger credit bureaus can obviously offer better offers along with better services and can also help you maintain a reputation in the market at some stage.

Once you manage to get a major card, use it very judiciously. If you flounder with the payments on this card, you may just have kissed your last option goodbye. Make attempts to put in the full payments at the end of the month; that will save you from the heavy interest charges. At the same time, keep your card in action by making continuous purchases and then paying in full for them at the end of each month.

The best thing to do is to use as little of the total credit limit you have with you. Keeping your debts small with improve your available and spent limit ratio. Therefore, it is wise to always keep high limit credit cards with you, and spend as little as possible out of that. In case you have two 5 cards with $1000 limit each which makes a total limit of $ 5000 for you. If you have already used $2500, ask the other cards to increase your credit limit so as to decrease your spent and available limit ration lower. For more info see http://www.creditscorereportguide.org/Free_Credit_Report_Online on instant credit reports.

Personal bankruptcy is indeed quite a sad thing to happen to anyone. But, more important than that is how to wear off the social effects of the bankruptcy. If you spend a good deal of time and effort, you can pull yourself out, but you must only know how to go about it. If you get someone who can guide you properly, nothings like that. You must hire a consultancy for this purpose which might take away a few $s but will definitely sort out the problem you are in.

It?s not that easy to recover out from a bankruptcy sort of a situation, but surely it?s not an impossible thing to be done. It can be quite a task recovering from personal bankruptcy, but it can be done. What you can do is to again establish yourself and gradually develop into a better credited person.