Filing bankruptcy can have a significant impact on your credit score. Because of this “negative mark,” many people look for a way to remove the bankruptcy from their credit report. However, most bankruptcies will remain on a credit report for seven or ten years, depending on the type of bankruptcy filing. In fact, there are only two ways that a bankruptcy will be removed from a credit report.
The first is if the bankruptcy is old enough to be removed. The second possibility for removal is if the details of your bankruptcy were inaccurately reported to a credit bureau. This situation is more prevalent than you may think. A recent Consumer Reports investigation revealed just over one-third of the population has at least one mistake on their credit report.
If you check your credit report and find an error, you must contact the reporting credit bureaus and file a dispute. The situation can often be resolved via phone, email, or online submission. Once a dispute is filed, the credit bureaus will be given approximately 30 days to send a response.
During those 30 days, the credit bureaus will contact the source of the disputed information to attempt to verify the information. The bankruptcy may be removed from your credit report if they cannot verify the correct information. If you feel that you have justification to dispute your credit report, call a bankruptcy attorney for guidance and next steps.
Repairing your Credit After Bankruptcy
A personal credit score will be adversely affected after bankruptcy. Therefore, it will take some effort in order to rebuild that credit score back to pre-bankruptcy levels or higher. Here are a few recommendations about how to successfully work on improving your credit score.
Don’t Miss Payments: Your payment history comprises 35% of your credit score. One of the best ways to prevent missing payments is to set up automatic payments for monthly bills. Most credit card companies will permit setting up automatic payments to cover the minimum payment, the monthly statement amount, or the entire balance. If you are uncomfortable having money pulled out of your account automatically, you can set up a calendar option to be reminded when the payment is due. You can also set up automatic payments on other bills. If the feature isn’t available, create a calendar reminder for a couple of days before the due date so you know you have a payment due.
Monitor Your Credit Report: Keeping a close eye on your credit report is a vital aspect of rebuilding your credit score. You need to watch your progress and pay attention to any possible mistakes that could cause additional damage to your credit. There are companies that provide credit monitoring services, which are typically fee-based. These services will update you on any transaction related to your credit score. Important to Note: If you discover an error that occurred because of identity theft, immediately contact the FTC’s website IdentityTheft.gov.
Spend Within Your Means: After the bankruptcy is complete, it is important to change behaviors to avoid falling into the same traps. You can begin by establishing a budget that will help you to live within your means in the future. Make a list of your fixed monthly expenses, and then determine the amount of disposable income left for food, entertainment, or shopping. Sticking to this budget month after month will help ensure you don’t fall into debt.
Carefully Use Credit to Build Credit: It may seem counterintuitive to use credit again, but credit cards can actually be very beneficial when rebuilding your credit. You can become an authorized user on someone else’s account or use a secured credit card. Secured credit cards require a security deposit that will represent the credit limit. The card is then utilized as normal, and each successful monthly payment will be reported to credit bureaus to boost your score.
Credit Report Problems? Ask Richard V. Ellis for Assistance
If you are considering bankruptcy or need advice post-bankruptcy, call the offices of Richard V. Ellis. We have helped thousands of area residents rebuild their financial lives.