What about my Credit Rating?
A bankruptcy filing is noted by various credit reporting companies. Federal law limits the length of time that this information may be carried on a report to ten (10) years. A bankruptcy shown on a credit report will adversely effect one’s credit. However, many of our clients have found that after filing bankruptcy, they can reestablish their credit over a reasonable period of time by promptly making the payments that they reaffirm, such as their car loans, house mortgage. Many of our clients have found that they can improve their credit score into the high 600s in two years and to above 700 within three years of completing their bankruptcy.
Our attorneys and staff will provide you information on how to reestablish credit by informing you:
- when to check your credit report;
- how to insure that the credit report only has information that it should have on it;
- how to correct incorrect information on the credit report by letter or by internet;
- How to obtain the right type of loans to reestablish credit;
- which types of loans can actually hurt your credit score and why to avoid those types of loans.
This and most of your other questions about bankruptcy can be answered in an appointment with us at no charge. Most of our first appointments take at least an hour because we want to make sure that you have a good understanding of the entire process to help you make the right decision for you. For example, we explain why loans with finance companies that normally charge high rates do not help your credit the same way that a loan from a bank will help. Thus, we cover how to make loans from banks after bankruptcy so you can build your credit score as quickly as possible.
How difficult is it to improve my credit rating if I elect not to file bankruptcy?
The answer to this question depends upon how quickly you can bring all of your loans and accounts current. If you can do that quickly and bring your balances down on your credit card debt, then you can raise your score rather quickly. However, if your credit card balances remain close to your credit limit and if you continue to pay your debts late, then your credit score will probably continue to fall.
Can I borrow money to buy a car or house after my bankruptcy case is completed?
Many clients come into our office with the belief that if they file bankruptcy, then they cannot obtain any credit for seven (7) years. Actually, your ability to obtain credit at any time is normally based upon three (3) factors. Those factors are:
- 1) your ability to repay the loan,
- 2) the creditor’s collateral position, and
- 3) your credit history or credit score.
If you have filed a bankruptcy, then your credit score is not going to be high immediately. However, as stated above there are things you can do recover as quickly as possible. Thus, filing a bankruptcy does not mean that you cannot obtain credit at all even immediately after completion of the case. Individuals that show the creditor that they now have the ability to repay a loan can in many cases obtain the credit necessary to purchase a car, but the longer one waits after bankruptcy, provided the borrower is taking the proper actions re-establishing credit, the lower the interest rate will be.
FHA and VA regulations provide that a person or persons can borrow funds to purchase a home provided that the discharge completing the bankruptcy occurred at least two years prior to approval of the loan and the borrower(s) meet the remaining necessary guidelines to borrow the funds to purchase a home.
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