Tip to Improve your credit

Credit After Bankruptcy

TIPS TO IMPROVE YOUR CREDIT SCORE

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Living strictly on a cash basis after your Bankruptcy is one of the worst mistakes you can make. And the reason for that is simple: say for example you have been paying cash for everything for the past 10 years, and then in the 11th year you decide you want to buy a house. No mortgage company is going to give you a mortgage because you do not have a track record of being able to use credit wisely.

Your main goal after you have filed for Bankruptcy and received you Discharge is to start Rebuilding Your Credit, Improving Your FICO Score and Saving Money. It is not that difficult. Think of the day when you were 18 years old, and wanted to buy that first car or get the first credit card...what did you do, and start doing the same things all over again. REBUILDING YOUR CREDIT and SAVING MONEY after the Bankruptcy is probably the most important things you can do for your future and your family.

Here are some of the things you can do yourself to rebuild your credit and raise your FICO Score:

1. Open a savings account (each pay period save 10% of your gross income in this account)
2. Open a checking account, and deposit every penny that you earn or whatever cash you get. Your future mortgage company will be impressed by the money you deposit regularly into your account. It shows stability and ability to earn money.
3. Open a secured credit card with a small limit about $500.00. Build your credit, and then request for a unsecured card (Bank of America, Citibank & Suntrust). Make sure these banks report your credit card activity to the Credit Bureaus.
4. Apply and open unsecured credit cards. Do not use them for unnecessary purchases, only to rebuild new good credit.
5. Pay bills on time or even early. Late payments after Bankruptcy are a death-Knell.
6. Cut your living expenses, save more, get rid of old stuff, have garage sales.
7. Remember credit was not the reason you filed for bankruptcy, but your unwise decisions on how you used the credit.
8. Our office may be able to assist you in restoring your credit file for a small fee. Remember, every little deletion of a derogatory item on your credit report will help you increase your credit score, which translates to getting credit at lower interest rates. Increase your FICO score. Borrow only from companies that report your payment history to credit agencies. Borrow from mainstream lenders only, e.g. “Bank” vs “Banc”. “Bank” is good. “Banc” is not good. Most Credit Unions do not report to Credit Bureaus.
9. If you already have a home and mortgage, consider signing up for a bi-weekly mortgage. If you paying bi-weekly instead of a monthly, you can save you 8 to 10 years off a 30 year mortgage, and thousands of dollars in interest. Call us to sign up for a Bi-Weekly Mortgage. If you do not own a home, and would like to own one, you will be eligible for a mortgage in about 12 to 24 months. However, mortgage companies require at least three active mainstream credit references. So get credit, build your credit, repair your credit, and increase your FICO credit score. Call us and we may be able to assist you through this process.
10. Open a Certificate of Deposit at a bank, and get a secured loan on the Certificate of Deposit (BB&T Bank, Bank of America, Suntrust, Citibank, etc.). Take the money from the loan, and open up another Certificate of Deposit at another bank, and get a secured loan on that Certificate of Deposit. Do this with a couple of banks. Once you start paying these loans back, the banks will report your activity to the credit bureaus and you will build new credit. Make sure that these banks indeed report your loan activity to the various credit bureaus.
11. Don’t be afraid to apply for credit (car loans, mortgage, etc.). The worst thing that can happen is that you will turned down. However, make sure you have all your documents in hand, such as your Bankruptcy Schedules, Discharge, tax papers, etc. However, do not let too many companies pull your credit report. A credit inquiry on your Credit Repor may reduces your FICO score by about 12 to 15 points.
12. Ask open-ended questions like “what would you do if you were in my situation” “Where would you buy a car if you were in my situation” Which lender would you go to get a mortgage if you were in my situation”. The answers you get will vary and may surprise you.

The following books can give you helpful insights on what to do after bankruptcy:

• Credit After Bankruptcy by Stephen Snyder
• The Automatic Millionaire by David Bach