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Improving Credit Score After Filing Bankruptcy
People can use five techniques for rebuilding their credit after filing bankruptcy.

Most people know that a person’s credit score affects many aspects of a person’s financial situation, such as whether one qualifies for a mortgage and what interest rates will be charged on other loans. Many who file bankruptcy fear that they will never be able to repair their credit scores, or you can’t get credit for ten years, a common myth. Generally speaking, re-establishing credit takes two to three years following a bankruptcy discharge.

There are steps you can take after a bankruptcy filing to insure that your credit score is restored as quickly as possible:

Check Credit Reports

Check your credit reports to ensure that all of the debt that was discharged in the bankruptcy is accurately recorded. All the discharged debt should have a zero balance on credit reports. If there are errors on the reports, contact the credit reporting agencies immediately to fix the mistake.

Limit Credit Applications

People should not fill out several applications for credit in a quest to get approval, otherwise creditors will label the applicant a “credit-seeker” who is desperate for any kind of credit. Lenders are wary of lending to a person who is seeking money from any source possible.

Limit Debt on Cards

Once a person has a credit card, he or she needs to limit the amount of debt carried on the card. Some believe that using the full amount of credit and then making payments on it will increase a person’s credit score. However, experts suggest using only about 10 percent of available credit.

Keep Cards Active

Conversely, people should not be too afraid of using their credit. People need to use credit so that the payments get reported to credit reporting agencies. If people have available credit but never use it, they do not demonstrate to other lenders that they have the ability to manage credit and make timely and consistent payments.

Secured Credit Cards

Secured credit cards are credit cards for which the cardholder deposits money equal to the credit limit with the issuing bank to protect against default. Such cards are a way for those who do not qualify for unsecured credit cards to create a positive payment history. Check that the bank will report payment history to credit reporting companies before taking out such cards, however.

Keywords: credit score, bankruptcy
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