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WHAT ABOUT MY CREDIT | |
The effect on your credit of Chapter 7 bankruptcy or Chapter 13 debt consolidation? Is the word DESTROY strong enough? How about OBLITERATE! Your credit is gone, face it! However, also recognize that financial problems are the real cause, not the bankruptcy or debt consolidation. Actually, filing under the Bankruptcy Code can be the first step in re-establishing credit! What do you mean? I've heard a bankruptcy can stay on my Experian for ten years!". True, but other negative information can stay on the report seven years, so that's not much better, and if you don't do something, your credit report just keeps getting worse. The fact is a bankruptcy or debt consolidation can be a CUT OFF POINT for a FRESH START. As Lee Iacocca, who achieved one of history's greatest business successes at Chrysler after being fired as president of Ford, said, "There are times in everyone's life when something constructive is born out of adversity."
For the moment, read my lips! FORGET CREDIT! Concentrate on getting your finances straightened- out. At the same time, break loose from the SNOW JOB constantly pushed at us that credit is good for you. Consumer credit earns huge profits for big companies from interest charges you and I pay with money we could better use for savings. One of the most important financial lessons anyone can learn is: AVOID CREDIT EXCEPT FOR SOMETHING THAT CAN INCREASE IN VALUE, LIKE A HOME. The FIRST PRIORITY is: get your finances under control. Work out your best strategy. Don't be controlled by what creditors demand or what you think will look good on your Experian. Bankruptcy or debt consolidation should be a last resort, but may be your best alternative. Start saving a little each payday.
Then comes the PLEASANT SURPRISE! Once the bankruptcy or debt consolidation is over, YOU CAN RE-ESTABLISH CREDIT! In fact "INSTANT CREDIT" Is a reality. HOW? through the magic of a SECURED CREDIT CARD! Most anyone can have a Master Card or Visa from one of the companies that will give you a credit card line based on your savings balance. Thus you're covered for identification and emergencies and your good payment record on this card will start your "new" credit record off right. Many department store credit departments will issue a department store credit card without running a credit check when you show them your MasterCard or Visa. Some will give a card even if they know of your bankruptcy. Then there's a secured bank loan. Go to a bank officer and explain that you're trying to get re-established. Ask his assistance in opening a savings account and obtaining a personal loan secured by it. Some will help. Actually you'll probably be able to finance a car right away but it will be at high interest cost. Don't charge anything unless you know you can make all the payments! After you have made payments for a while, have your account reverified and your credit file updated by the credit bureau. Within a year or two, with prompt payment histories on two or three of these new credit accounts, even though your record still shows the bankruptcy or debt consolidation, it will not prevent you from qualifying for many loans including, for instance FHA and VA insured home loans.
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| Experian http://www.experian.com/consumer/index.html 1-888-397-3742 |
Equifax Credit Information
http://www.equifax.com/ 1-800-685-1111 P.O. Box 740241 Atlanta, GA 30374 |
| Trans Union Credit Information Co. http://www.transunion.com 1-800-888-4213 Post Office Box 2000 Chester, PA 19022 |
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Credit approval is usually based on a composite "score" including several elements. Significant factors of a positive credit profile that you can work on, in approximate order of importance, are: 1. A positive up-to-date credit report. Order a credit report from each of the three main credit bureaus in the area. If you have been turned down for credit within the past 30 days because of a derogatory credit report, the bureau must furnish you a copy of the report free, otherwise it costs approximately $10. Examine it closely and send back a written request that they correct any inaccurate personal information and reverify any incorrect credit data. They are required by law to do this, so keep after them till they get it done. Don't waste money on a so called "credit doctor." 2. A home with mortgage, payments current. 3. A job you've held for a year or more. 4. A current or paid-off bank-loan. 5. A MasterCard or Visa card. 6. A department store credit card. 7. A telephone in your name. 8. A checking account, positive balance, with good record. 9. An explanation in your credit report of the reason for the bankruptcy or debt consolidation. You have a right to insert up to 100 words and can explain, for instance that your problems were caused by: "Hospital & other medical expenses resulting from wife's injury." or "Out of work for six months after layoff." Establish or strengthen as many of these elements as possible. Within one to two years after a bankruptcy, many people have a good credit again. The wise ones have also learned to control their finances and to avoid using credit improperly. You can too!
UNDER THE FEDERAL FAIR CREDIT REPORTING ACT YOU HAVE THE RIGHT TO... 1. Obtain from a credit bureau a report of what's in your credit file. 2. Know who has inquired into your credit file . . stores, banks, employers, others. 3. Request reverification by the credit bureau if information is incorrect. 4. Get missing data added to your file. 5. Have detrimental credit information removed from your file after seven years and bankruptcy information after ten years. 6. Put your side of the story in your credit file. 7. Privacy of the information in your file from anyone other than legitimate members of the credit-reporting agency. 8. Have your credit report transferred from one area to another any time you move. 9. Use small claims court to resolve any disputes with the credit bureau about incorrect, inaccurate information in your file. 10. Know exactly why you were refused credit. You must contact the institution refusing credit within ten days. 11. Remain silent about poor credit information that does not currently appear in your file.
What about leaving a credit card out of your bankruptcy or debt consolidation? If you owe a balance, the law requires that you list the creditor. Most argue that you needn't list a card with a zero balance. Keeping a card can be dangerous, though, because its all too easy to get right back into trouble! |
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