Life After Bankruptcy in St. Louis

Ten (10) Must Know Secrets For Rebuilding Credit   

There is Life After Bankruptcy!  Your ability to re-establish credit after filing bankruptcy is better than ever.  After you get your bankruptcy discharge, you will receive many solicitations from lenders offering to finance homes, vehicles and credit cards.

And why not?  Bankruptcy gets rid of debt and getting rid of debt is the first step for re-building credit. Getting rid of some debt puts you in a better position to handle more credit.  In fact, many, many former clients have told us they started getting credit card offers right away, within weeks after their bankruptcy case was done.

 

Here are some tips on how to rebuild your credit.

1.  Open a checking or savings account. And, start saving some money. You will need money for down payments. The more money you can pay down on a purchase, the lower the interest rate you will get. Besides, lenders may look at how you handle a checking and savings account as one indication of whether or not you can responsibly handle money.

2.  Apply for store and gas credit cards where you would normally pay cash.  

3.  Apply for a secured card where you deposit cash and charge against it. Make sure you only apply for secured cards with a company that promises to report regularly to the major credit reporting agencies. The major credit reporting agencies are Equifax (www.equifax.com) , Experian (www.experian.com) and TransUnion (www.transunion.com). They maintain your credit record. Think about it. What good does it do to get a secured card from a company that does not report to the major credit bureaus? Pay back advances in a timely fashion to build a track record of paying on time, so that they will be reflected as positive marks on your credit report.

4.  Pay your utility bills and rent on time. After filing bankruptcy, building up a history of paying on time is crucial.

5.  Find a friend or relative to cosign for you on a loan and pay it on time. But be careful here.  If you don't pay it or don't pay it on time, you will do significant damage to the credit record of the friend or relative who was kind enough to cosign for you.

6.  Look for car dealers and mortgage brokers that claim to be "bankruptcy friendly". Buy a used car so you do not get hit with the depreciation that occurs during the first two years of a new car purchase.

7.  Stay away from payday loans and finance companies that are at high interest rates and are a "bad credit" trap. These outfits will suck you dry and leave you back in debt.

8.  Write a letter to each credit reporting agency explaining the circumstances that lead to you filing. You are allowed to submit up to 100 words of explanation to each credit reporting agency.

9.  Live within your means. If you don't have the money, don't spend it. If it helps, limit yourself to what you need rather than like in the old days that lead you deep into debt when you bought everything you wanted whether you needed it or not. And, as a rough guideline, try to make sure your payments on consumer debts don't exceed 20% of your expendable income after your costs for housing and a vehicle.

10.  Pay your remaining debts left over from your bankruptcy on time. This is worth repeating. This includes things like non-dischargeable taxes, student loans, car loans, truck loans, and house mortgages. This is crucial...if you want to reestablish your credit.

11.  BONUS TIP! (Sorry, I guess 10 Secrets For Rebuilding Credit sounded better than 11 Secrets!) Make sure the information on your credit report is accurate.  The best way to do this is to get an updated copy of your credit report.  After filing bankruptcy, it's probably a good idea to get an updated credit report every 6 months for a year or so.  How do I get a copy of my credit report?  The easiest way is to get it directly from one of the 3 major credit reporting agencies.  Each of them offers a "3-in-1" credit report, which simply means a credit report containing all the information from all three of these agencies.  The best way to order your credit report is "online".  You can go to any of these websites: Equifax (www.equifax.com) , Experian (www.experian.com) and TransUnion (www.transunion.com).  There is also other valuable information on these websites, including: (1) information to help you understand your credit score, (2) further information on how to rebuild your credit, and (3) information on how to fix any errors that may appear on your credit report. You also have the right to receive one (1) FREE credit report each year.  Your right to one (1) free credit report per year is mandated under the Fair and Accurate Credit Transaction Act of 2003.  There is only one official website: www.annualcreditreport.com. At this website, you can order a copy of all reports compiled by the three major credit-reporting agencies:  Equifax, Experian and Trans-Union.  This site can also be accessed through a link at the Federal Trade Commission (FTC) website: www.ftc.com.

You can also get your FREE credit report by calling toll free to: 1-877-322-8228. You will need to provide your name, address (and previous address if you have moved recently), Social Security Number and date of birth. You will be asked to answer some authentication questions to make sure that it is you...and not somebody else...trying to get your information, such as when was your last mortgage or car payment.

 

WARNING: FAKE SITES

There are fake sites, and lots of them. Be on the lookout for fake "free-credit-reports" sites that lure you into buying credit monitoring services.  The Federal Trade Commission has already identified at least 130 such sites.  Here's the test:  If you are asked for your credit card number, you are likely at a fake site.  Pop-up ads or email messages claiming to be for the official web site are probably scams.

 

Which Credit Report Should I Request?

Ask for copies of all three agencies' reports...Equifax, TransUnion and Experian...as the information listed with each agency sometimes varies due to factors such as out-of-date listings or wrong account numbers.

 

What's In The FREE Credit Report?

The reports from the 2 major credit reporting agencies differ in style and appearance, but they all contain 4 basic categories of information:

• Identifying Information

• Credit History Information

• Public Records Information

• Inquiries For Your Information

 

What Your FREE Credit Report Does NOT Include.

Unlike the credit report, information about your credit score is NOT FREE.  But it's more important.  Your score can affect many things, including your ability to get loans, your insurance premiums, and even your employment.  Scores range from 300 to 850 and are used to predict how likely you are to pay your bills on time.  The higher the score, the better off your are. You can order a copy of your credit score, which is based largely on credit history, from all 3 major credit reporting agencies at the official site: www.annualcreditreport.com.

The fees for a copy of your credit score are as follows (as of 1/1/08):

• Equifax: $6.95

• Experian: $5.00

• TransUnion: $5.95

 

What Should I Do With My FREE Credit Report?

Check the entire report to make sure it is accurate and pay close attention to items such as loan balances, credit limits and past-due amounts.  Make sure that you recognize each account, including mortgages, loans and credit cards.  If you don't know the creditor, check it out.  Sometimes companies change their names, or it could be a fraudulent account.    Closely review all negative information to make certain the amounts and dates of delinquency match personal records.  Also look for out-of-date accounts.  Negative information should remain on credit reports only for seven (7) years.

 

How Do I Handle Disputed Information?

If you find an error or unknown entry on the report, you should notify both the creditor and the credit agencies (www.equifax.com, www.transunion and www.experian.com).  Credit reporting agencies usually have 30 days to investigate, make corrections and give customers an updated report that does NOT count as their annual freebie.  Document the dispute in writing!