Rebuild your credit after Bankruptcy

Most credit scores range between 500 and 700, a score above 620 is normally necessary for a reasonable rate mortgage. You can rebuild your credit after bankruptcy by sweeping your credit file and paying your debts on time after bankruptcy.  We have a couple of services we work with to do that but you still need to know what helps your score. This is what your credit file should look like after bankruptcy.

Rebuild your credit after Bankruptcy

Rebuild your credit after Bankruptcy

5 factors largely determine your score.

Your payment history.

The most important factor in your credit score is whether you paid your past creditors on time.  The longer it has been after the default the better.  If a creditor was paid late how long ago was it since you missed that payment.  How serious was the account.   Was it just one creditor you had problems with or do you treat everyone this way?  The more creditors and the more recent and the larger the account the more it hurts your credit score.

Bankruptcy should put all of your accounts into an account closed status.   It should take all of them out of a delinquency status.    Unless you reaffirm and go back to owing and defaulting your account history should be removed.

How much you owe.

If you owe a great deal of money on numerous accounts it becomes impossible to lend any more to you.  It indicates you are or may be overextended. It shows you over borrow and under pay your debts.   You want to have a small balance on a high credit limit and a history of paying it off or paying it down.  If others trust you and you have paid not only on time you are likely to repeat it.  If you pay  balances down you are likely to repeat it.

How long is your credit history. 

The longer you have accounts open, the better. The average consumer’s oldest obligation is 14 years old, indicating that he or she has been managing credit for some time, according to Fair Isaac Corp., and only one in 20 consumers have credit histories shorter than 2 years.  Having no history is better than a long history of bad accounts.  You want to eliminate the history of bad accounts and only have a history of the good repayments.  Bankruptcy does exactly that.  If you go back to not paying on time, you will continue to have a poor score.

How new is the credit that you do have.  

New credit accounts are far more risky than an old account that has a long history of charges and repayments.   Even if you pay your installment payments or credit cards on time, New credit is  considered more risky than old accounts.  Risky accounts often load up on new credit just before the file bankruptcy or otherwise just charge off.

How many types of credit do you have.

It’s desirable to have more than one type of account.  Car loans, Mortgages and personal note loans are examples of installment loans.  Department store accounts, and credit cards are revolving accounts.   If you consistently repay every kind of debt you have then you are far less likely to default.

If you want to understand better how to establish good credit after a bankruptcy you can research, evaluate and under your credit score by visiting www.myfico.com.   You can delete some of the inaccurate and bad information at

Credit Assurance: A service associated with bankruptcy attorneys which corrects your credit files after bankruptcy

Lexington Law: This service is the most expensive but still a lot cheaper than the cost of bad credit..

CreditInfoCenter. Forums Forms and information on credit repair


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