One of the most common questions we get asked by our Boston bankruptcy clients is: what will happen to my credit if I file for bankruptcy? Our website has the answer to how the credit reporting agencies score your credit. But what can folks do?
The following are surefire ways to aid you in improving your credit after bankruptcy: make a budget and never spend more than you earn; check your credit report and send letters to fix mistakes; get a new credit card, secured or unsecured, use it, and make the minimum payment religiously (35% of your credit score is timely payments); pay more than the minimum payment when you can; try a savings account loan to build up credit; avoid scams and get credit quick-schemes.
New Program Helps People Get Immediate Improvement in Credit Scores
Local Initiatives Support Corporation has a program that looks like an amazing way to help low and moderate income folks reestablish credit. The program, based out of Chicago, allows folks to immediately receive $300 in credit by taking out a loan. However, the consumer does not get the loan, he or she simply starts paying back the money at the rate of $26.24 per month. Each time he makes a payment LISC makes a payment of $25 into the account! You get paid to pay off your debt – a huge incentive! By the end of a year, you have double the credit limit, or $600, and a vastly improved credit score. That is, LISC is reporting your timely payments and your buildup of additional credit each month!
According to LISC the credit score of consumers after only six months in this program is 676. Further, participants have savings and have a “gift” of the monies deposited by LICS.
How Do The Credit Agencies Determine Your Credit Score?
Credit reporting agencies use a system based on the following to determine your credit score: 35% of your credit score is based on your history of timely payments; 30% of your credit score is based on the amount you owe; 15% on the length of your credit history; 10% is based on new accounts and credit inquiries; 10% is based on the type of credit you owe on.
We always tell our clients to check their credit reports. Send a letter to the agencies when there are mistakes. Back up the letter with documentation.
Is Owing money bad?
No. Not in this world. Most folks need credit for cars. It’s not likely anyone can purchase a home without a mortgage, and there are tax deductions that make it advantageous. Owing money without the ability to pay it back is what puts folks into a bankruptcy situation.
Since credit reports are often used by landlords and potential employers, owing money, and having a good credit history is, of necessity, practical.
Hire An Experienced Bankruptcy Attorney
We are often asked by former clients about a bill that slipped through or creditors trying to collect on an old, properly discharged, debt. We help our clients when a discharged debt is resurrected by the debtors: we send out a cease and desist letter. This is the type of service you get when you retain an experienced Boston bankruptcy lawyer. Call Attorney Neil Burns at 617-227-7423 for a free consultation.
