The recent financial crisis gave us so many problems in terms of credit. It left a lot of us unemployed, with very little means to provide for our families. It made us resort to high credit loans just so we can support our basic needs. It even left us desperate to find credit lines for us to pay our monthly bills. Because of the trying times, many of us find it inevitable to file for bankruptcy.
But bankruptcy actually has many benefits. It can help prevent the repossession of your properties, as well as the cutting off of your utilities services. Filing for bankruptcy can also permanently stop the harassing calls and collection activities of your creditors. And most importantly, this option can provide you an opportunity to start a new life. Through bankruptcy you can lead a life free from anxieties over unsettled debts.
Still, a lot of individuals are apprehensive about this debt option. They think that a bankruptcy credit report will totally ruin their credit history. Some even think that a bankruptcy can forever brand them unworthy to receive credit. Buts are these beliefs true? How does a bankruptcy credit report exactly influence your credit records? Let us discuss the answers to these queries.
The Impact of Bankruptcy on Your Credit Report
Once you file for bankruptcy, the three credit report bureaus will be informed of the bankruptcy court’s decision. They will need to record this legal action in your credit information. A bankruptcy credit report is usually attached to your record for at most ten years. Still, you can request reporting agencies to drop off or delete your bankruptcy record in your report after seven years.
Bankruptcy is considered a negative item in your credit report. This is because it erases all credit history you tried to build in the past. It can lower your credit score by as much as 100 points. And it is sad to note that a low credit rating is usually the cause of a difficulty in finding credit lines.
But the negative effects of bankruptcy are temporary. As soon as your debts have been discharged, its damaging impact to your credit score also begins to fade away. By that time, you can start rebuilding your credit history for you to regain credit worthiness.
Life after Bankruptcy
To recover your credit health after bankruptcy you must obtain your most recent credit report. Ask any of the three credit reporting agencies to provide you your latest records. You must make sure that most of your debts have been covered under your bankruptcy. Look also at the other secured debts that you must settle. Make sure that you pay all your other charges on time. In so doing, you can gradually improve your credit score.
You can also get any form of credit. You may take a car loan or a secured credit card. Make sure that the term of the loan and the interest rates will be suitable to you. Once you have been approved for any of these credit lines, be sure to make prudent payments on your credit charges. This way you can receive high credit scores and restore your credit worthiness.
About the Author:
Suzy Vanstrusen is a credit analyst and a writer on the website EZCreditRepairSolutions.com. She has been providing consumers with tips and wise information about credit repair as well as helping you out more with your bad credit loans. Copyright © 2010