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

Blog tags

credit score

FICO score

improve your credit score

north carolina

bad credit

bankruptcy

building credit

How Is Your Credit Score Calculated? Here Are the Details

Rachel — Thu, 07 Jul 2016 07:30:54 +0000

How Is Your Credit Score Calculated? Here Are the Details Rachel Thu, 07/07/2016 - 03:30

How is your credit score calculated
Image Source: Flickr CC User amboo who?

Even though your life shouldn’t revolve around money, the fact is, finances are important and your credit score matters. Most people know they should strive for good credit, but when it comes to how this score is calculated, and how to improve it, many North Carolina consumers don’t understand the nitty gritty details that drive the calculation.

What Is a FICO Score?

FICO is an acronym for the company that invented the most-used credit score calculation – Fair Isaac & Company. FICO scores are used by all three credit reporting agencies – TransUnion, Experian and Equifax – although each uses a slightly different calculation. FICO scores and credit reports are NOT the same thing.
Think about it this way: Your credit report is a roster of your activities. It shows your loans, credit cards, collection accounts and other activity related to debt and creditors. It’s simply a list of your open and closed accounts over the past seven to 10 years, plus activity on those accounts, balances owed, the type of debt you're taking on, and whether you’re current on your obligations or not.
From that information, a FICO or credit score can be calculated. Different aspects of your report are evaluated by the three reporting agencies to come up with your score. Scores range from roughly 300 to 850 depending on the credit agency and score methodology they used.
A score below 500 is considered a “bad” credit score. Scores under 600 are considered “poor.” Fair scores are 601 to 660, 661-780 is “good” and 780 and up is “excellent.”

How Is the Score Calculated?

Five elements play into the math of the credit score calculation. Payment history, amounts owed, length of credit history, types of credit accounts, and recently opened credit accounts are all factored in. Payment history is the most important component, making up 35% of your calculation.
Balances owed makes up 30% and, as such, are the second most weighted component. Length of credit history makes up 15% of your credit calculation. Types of credit accounts and new credit accounts each make up 10% of the score calculation. What this means is that your payment history is the most important aspect of your credit score calculation.
If nothing else, always paying your bills on time, particularly those that report to credit agencies, is the first step toward protecting and improving your credit score. Your score is important even if you’re not planning on applying for new credit since it determines many other things in life.
For instance, your credit score may determine whether or not you must put down a deposit to get utility services, how much you pay for variable rate services, and whether you can be denied for “non-essential services” such as cable and Internet. Credit score also factors into acceptance and rates for car insurance and certain leasing agreements.

The bottom line is that, like it or not, your credit score matters. If you recently filed North Carolina bankruptcy and are looking for ways to improve and rebuild your credit score, contact Credit Score Keys now for a free consultation on cleaning up and improving your FICO score after bankruptcy.

Blog tags

bankruptcy

credit score

credit score after bankruptcy