6 Tips to Improve Your Credit After Bankruptcy for a Better FICO Score in 2017

Rachel — Thu, 02 Feb 2017 08:41:58 +0000

6 Tips to Improve Your Credit After Bankruptcy for a Better FICO Score in 2017 Rachel Thu, 02/02/2017 - 03:41

Get a better credit score in 2017
Image Source: StockSnap.io

A healthy credit score is critical to be approved for loans, get affordable financing, and pay a lower cost for many types of insurance and utilities. A recent survey by the American Bankers Association says just 60% of consumers checked their credit report last year.

Many consumers don’t understand how credit scores are calculated or how to improve one. There is no overnight cure for a low credit score, but there are strategies to apply to improve it over time. Start now, and you can have a better score before you know it. Consider these tips.

#1 Start Secured
After bankruptcy, you won’t have any credit card accounts. That’s the first place to start. Most consumers must begin with a secured credit card after bankruptcy, but all secured cards are not the same.
Do your homework and choose one that doesn’t have high annual fees, a ridiculous set-up fee, and over-the-top interest. Also, research to see which secured card issuers will work with recent bankruptcy filers – not all will do so.

#2 Check Your Report
Many bankruptcy filers gave up on monitoring their credit score because they know it’s not good news. After your bankruptcy discharge, pull your credit report from all three bureaus – Experian, TransUnion, and Equifax.
Make sure all accounts listed in your bankruptcy petition reflect a zero balance from the discharge. Also, look for accounts that are fraudulent or inaccurate and get those cleaned up by contacting the bureau and filing a dispute.

#3 Track Your Credit Score
To confirm your credit score is improving, you must know your starting point. Your credit report is not your credit score - don’t confuse the two. Discover offers a true FICO score to everyone – not just Discover card holders.
To get your true FICO score, visit credit score card dot com and get a free account. You’ll get the same score most potential creditors use, and you’ll get a quick rundown of what factors are helping or hurting your score.

#4 Apply for New Credit Strategically
It’s important to get a credit card account ASAP after bankruptcy discharge because one factor in your credit score is the average age of credit. Older accounts help you so even when you get unsecured cards, keep your older accounts.
New accounts also help your score but don’t apply for credit without being sure you’ll be approved. Research online credit forums to find out specific criteria and make sure you apply strategically, so you don’t get denials.

#5 Pay Off Balances in Full
You never want to fall into a trap where you get in too deep with credit cards. Cards are essential to improve your credit score, but you shouldn’t carry balances month to month. If you do, you’ll be stuck paying interest.
Instead, use cards wisely, perhaps for utilities and other necessities. You can pay off regularly and in full and don’t buy things you don’t need. If you pay off before your statement date, you shouldn’t incur any interest.

#6 Get New Credit but Use It Sparingly
Another part of your score is utilization. Your utilization is calculated as the percentage of balances owed on revolving credit compared to your total available lines of credit. If you have $10,000 in credit lines, that’s the first part.
If you have $2,000 in balances, that’s 2000/10000 = 20% utilization. That's not terrible, but lower is better. When you get new credit, it helps your utilization but only if you don’t use it. Keep your balances at low or zero for best results.

Make the Most of Your Fresh Start
After you get a bankruptcy discharge, it’s time to work on improving your credit score. There is no time to waste. If you’re not sure where to start, contact Credit Score Keys for assistance. We help North Carolina consumers improve their credit scores after bankruptcy.

Resources: ABA Survey
Discover Score Card

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7 Habits That Can Improve Your Credit Score Fast After Bankruptcy

Rachel — Thu, 23 Jun 2016 03:32:11 +0000

7 Habits That Can Improve Your Credit Score Fast After Bankruptcy Rachel Wed, 06/22/2016 - 23:32

Habits to improve your score after bankruptcy. Image Source: Flickr CC User Julie Rybarczyk

Improving your credit score is never more important than after you get a bankruptcy discharge. Just as healthy dietary and physical habits can keep your body in good shape, healthy financial habits can improve your credit score and allow you to make the most of your financial fresh start.

Here are seven habits to help your credit score after bankruptcy…

#1 Apply for Credit Cards Wisely

Not applying for new credit can hurt your credit score, which won’t improve without activity. But applying for too much credit at once can tank your score since credit inquiries (i.e. a credit check) will temporarily lower it. These inquiries lose impact with time and gradually fall off your report, but you should still only apply for cards you’ve researched and have a good chance of receiving.

#2 Stagger out New Accounts

The average age of your credit accounts is important. Opening too many new accounts can drastically lower your age of credit, which will lower your score – even though you now have more available credit from more creditors. To avoid this, do your homework, research card qualifications and then apply for new credit at spaced-out intervals.

#3 Don’t Cancel Old Credit Cards

Because the age of your credit is so critical, closing older cards is also unwise. Post-bankruptcy, you’ll likely have to start rebuilding your credit with a secured credit card. You may be tempted to close this after a couple of years since you'll likely have “real” credit cards and because you want to get back the deposit you had to put down to get the secured card. But closing this account can hurt your credit score. Instead, leave it open – you can always close it later when your credit has more fully rebounded.

#4 Keep Balances at Low or Zero

Your credit utilization is important, but you never want to carry a balance if you don’t have to. Instead, consider using your credit cards for monthly recurring bills like Netflix. You can also use cards for groceries and other necessities, then turn around and pay off the card balance immediately. You don’t even have to wait for the statement to cut – just pay online.

#5 Pay off Collection Accounts

If you’re coming out of bankruptcy, you hopefully don’t have any accounts left in collections. But if you do, or if you ever end up with an account in collections, paying it off is wise. Some credit score calculations don’t count collection accounts with a zero balance against you. This can be a way to bump your score instantly and get one more thing off your debt roster.

#6 Pay Often and Early

When it comes to your bills, never pay anything late. It can be a slippery slope. With online bill pay options, there’s no excuse not to pay on time. Set up a schedule and remember to allow even electronic payments a few days to process. Stay on top of your bills, and if you can, set up a budget and stick to it. Late payments cause late fees and other negative consequences.

#7 Monitor Your Credit Score and Report

In order to keep improving, you need to know where your credit currently is. You also need to ensure that your efforts are paying off with a higher score. In addition, it's good to keep an eye out for errors, identity theft, and other issues that can crop up on your report. Enroll in a low-cost service that allows you to monitor all three of your credit reports, and check them on a monthly basis.

To find out more about improving your credit score after bankruptcy, contact Credit Score Keys today. Call today and be sure you make the most of the fresh start that bankruptcy offers.

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