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Credit Repair
The key to your future purchasing
power after a bankruptcy will be your credit rating. The way you
rebuild your credit will greatly influence whether your rating
remains low, increases slowly over time, or increases rapidly over
time.
The best starting point for the repair
process is your credit report itself. The three credit reporting
agencies in this country are:
Experian (1-888-EXPERIAN or
www.experian.com)
Equifax (1-800-685-1111 or
www.equifax.com)
TransUnion (1-800-916-8800 or
www.tuc.com)
Your credit report tells you what
information prospective creditors will see when you apply for
credit. Credit reports are also used by potential employers
and some auto insurance companies, so your report should be as
accurate as possible.
Starting March 1, 2005 Federal Law
entitles you to one free copy of your credit report annually. An annual review of your credit report
will help you determine its accuracy. If you find any errors,
write to the credit bureau you received the report from and tell
them what information you dispute. Follow up in a couple of
months to make sure they have corrected the information. If you
dispute something in writing, the credit bureau has to check the
information and they will remove it if their investigation proves
you were right.
The credit bureau may not accurately
reflect your most recent discharge; therefore, you should send
them a copy of your discharge notice and the schedule of
creditors. Furthermore, you may want to inform the credit bureaus
of the following information (the credit bureau does not have to
add this information but often will):
Current employment
Current residence
Current phone number
Date
of birth
Checking account number
Another strategy for building your
credit record is to make sure everyone that you pay on time
reports this information to the credit bureau. If you ask someone
you make monthly payments to report this to the credit bureau,
this may improve your score.
Once you have established that the
current information on your report is as accurate as possible,
your next goal is to improve your score as much as possible with
new credit references. A methodical approach to credit will yield
the best results.
First, establish a realistic household
budget so you have a clear idea of how much debt payment your
budget can handle. A budget allows you to realize how much money
is coming in and how much money is going out each month. A sound
budget is key to rebuilding your credit.
Second, begin
to obtain credit. Evaluate the credit offers you receive based on
the type of credit, interest rate, grace period, annual fees and
any other terms so you know exactly what you are obligating
yourself to. This process is essential because your application
process should remain focused. A large number of credit inquiries
caused by a flood of applications by you can cause you to be
rejected by creditors who would otherwise approve you. Be
selective!
A starting point in obtaining credit
is getting one credit card. You may only qualify for a secured
card but whether it is secured or unsecured, you can use it to
build your credit. Once obtained, make a small purchase each
month (e.g. $25) and pay it off when the bill arrives. By paying
the balance due and not carrying a balance over to incur interest
charges shows prospective creditors you can manage your account.
Once you have
established yourself with the one card, you might be anxious to
apply for many more cards. However, you should be careful in not
getting too carried away. Ideally, you should carry one or two
bank credit cards, maybe one department store card and one
gasoline card. Try not to charge everything on your bank credit
card and not use your department or gasoline card. When creditors
look in your credit file; however, they want to see that you can
handle more than one credit account at a time. Do not build up
interest charges on these cards, but use them and pay the bill in
full.
Another method to rebuilding credit is
to apply for a small loan at your bank. After using a credit card
for a time, obtaining a small consumer loan and paying that on
time will improve your credit score. Please note, whether it is a
new loan, car loan, home loan, student loan or credit card, make
sure you are on time with all of your payments. You must pay all
of your bills on time after a bankruptcy to build your credit
effectively.
If you follow the steps outlined
above, it will take about two years to rebuild your credit. In
addition, it is extremely important you are on time with all of
your payments. If you aggressively build your credit after a
discharge, you may be eligible for a home mortgage within a
two-year period.
Other sources for information in
credit repair
-
The Guerrilla Guide
to Credit Repair: How to Find Out Whats Wrong With Your Credit
Rating And How to Fix
It By Todd Bierman, Nathaniel Wice
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On Your Own For The
First Time By Jeff
Bowers
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Repair Your Own
Credit and Deal With Debt By Brette McWhorter Sember
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The Credit Repair
Kit By John Ventura
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The No
-Nonsense Credit Manual: How to
Repair Your Credit Profile, Manage Personal Debts and Get
Right Home Loan or Car Lease By Shaun Aghill
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The Complete Guide
to Credit Repair By
Bill Kelly, Jr.
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The Insiders Guide
to Manage Your Credit :
How to Establish, Maintain, Repair, and Protect Your Credit
By Deborah McNaughton
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Guaranteed Credit
: A Time-Tested Program
Guaranteed to Provide Clear, Step-By-Step Information on How to
Repair, Restore and Rebuild Your Credit By Arnold S.
Goldstein
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Getting Out of Debt
: Repair Bad Credit and
Restore Your Finances! By Rich Mintzer
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Repair Your Credit
By George Williams III
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