Credit Repair, Debt Settlement, and Bankruptcy: part 2.
September 11, 2007
You maintain your car, your home, and your body regularly, why not your credit? Like it or not, your credit score is used to make all kinds of decisions about you in today’s business world. From the actual cost of your home and car insurance premiums to negative employment decision by potential bosses, your credit score is used for more than determining what interest rate a bank will charge you.
The problem? Banks don’t want you to know what factors the score is based upon. False information abounds. For instance, if you have a bankruptcy on your credit report, can you ever get another line of credit? Of course you can. The banks will send you offers for new credit cards the day after your case is filed. The reason? You are a good credit risk again, you can’t file bankruptcy for eight years, AND you aren’t dealing with other unsecured debt.
Good idea? No. This is not the way to rebuild your credit.
New, unsecured lines of credit do not improve your credit score. They carry a high risk of default and they are often the reason for the bankruptcy filing in the first place. They should be avoided. If you need a credit card for emergencies, fine. Other than that, steer clear of them.
The real answer(s): new relationships with different banks and diligence with your credit reports will allow you to get your credit score up in a matter of a year. In my 10 Steps to Rebuilding your Credit, this process is laid out in detail. I provide the information free of charge to all my bankruptcy clients, but they are not the only ones who can benefit from the process.
Who needs credit repair? Anyone who has negative entries on one of the three major credit union reports can benefit from credit repair. And, anyone who doesn’t qualify for a bankruptcy filing and is, therefore, looking at settlement options needs a credit repair strategy.
Bottom line? Take care of your credit like you do your car. Tune it up regularly by looking over your credit reports. Every year, go to www.AnnualCreditReport.com, a FREE site that does not want a credit card number. While it does not give you a FICO score, it gives you a free look at what is on all three major credit bureau reports. If there are negative items, hire someone to help you get them removed by either paying the debt in full or working out a settlement. Once the negative items are dealt with, you can move forward with credit repair.
