Late Payments
The first topic we wanted to discuss that affects your credit score is having late payments. Having one late payment will probably not affect your credit score too much but if you begin to make it a habit to make your payments late each month you definitely could start seeing dings in your credit score. Some tips that you might be able to implement is see if you can set up your monthly payments to become automatic. You can either do this by having the monthly charges go directly to your credit card or you can set up automatic mail payments with your bank and they will mail your checks each month for you. Make sure to make it a priority of yours to make your payments on time, especially if you want to maintain a good credit score.

Utility Bills
The dreaded monthly utility bills can have an effect on your credit score too! Many people do not know this but making late payments on your utility bill or failing to pay those bills altogether can have a negative effect on your credit score. If you are planning to move to a new location make sure to take care of any utility balances you had with your previous residence. If you decide not to pay any utility balances from your previous residence you could very well see a ding on your credit report in the future.

Revolving Utilization
This revolving utilization is a term used for the percentage of debt you are using compared to the limit that you are given. Revolving utilization is also known as “debt-to-limit-ratio.” For example, if you are given a credit limit of $10,000 and you only decide to use $1,000 of this limit, you would be considered to have a credit revolving utilization percentage of 10%. It would be best for you to try to not carry a balance each month so you don’t have to pay interest, but if you do decide to carry a balance each month try to keep the revolving utilization percentage under 30% and if you can keep it under 10% that is even better.

Applying for More Credit
Something that a lot of people may not realize is that each time you apply for more credit this can actually have a negative effect on your credit score. Applying for larger loans, for example a home or car loan will have a greater effect on your credit score. Each time you apply for the loan you are “pulling” from your credit and that is what can knock your credit score down in the short term. Many real estate agents may also recommend to you not to apply for a car loan if you are looking to apply for a home mortgage in the near future. This is because if you do this you may be able to get approved for the car loan but may get rejected from getting your home loan.

Length of History
The length of history for one’s credit score is a significant factor in determining your credit worthiness. People with a long credit history are deemed more stable and predictable in determining whether or not they will be a good candidate for a new loan. Many bankers will usually advise you not to close your very first credit card for this very reason. Even if you are not using that first credit card that you got in freshman year of college, it would probably be wise of you to keep that line open so you are showing a long credit history with many years for creditors to analyze.

Credit Report Errors
It is important that you keep an eye on your credit report every few months. Every so often there can be mistakes and errors that show up on your credit report. Make sure to check your credit report so that there are none of these mistakes that are hurting your credit score. If there are any mistakes on your credit report you should try to clear things up as soon as possible so it doesn’t continue to bring down your credit score.

Canceling a Credit Card
This may come as a shock to you but canceling a credit card can actually cause your credit score to decrease. This is especially true if your credit card currently has a zero balance. This has to do with the overall credit revolving utilization ratio. If you have a zero balance on your credit card it may be better for you to keep that card open, especially if you have a high credit limit on that card. Make sure to discuss with your banker first if you are thinking about closing a credit card in the near future and see what their opinion is on if it will hurt your credit score or not.

Foreclosure
Going through a foreclosure can be a very stressful and time-consuming process. Unfortunately, the headaches sometimes don’t always end after the foreclosure is finished. A foreclosure can drastically reduce a person’s credit score and may stay on their credit report for up to 7 years. This is why it is so important for you to call our firm first if you are going through financial hardships. We will try our best to help you through the bankruptcy process and with rebuilding your credit score after everything is finished.

Cosigner Nightmares
This is a story that will continue for years and years to come. Try to not fall in the trap of becoming a victim of a cosigner nightmare. This has to do with when someone who has good credit helps someone with no credit or bad credit get a credit card. If the person with no credit decides not to pay or make late payments each month the cosigner is responsible for that person. Be very careful if you decide to help cosign a credit card for a friend or family member. If they don’t pay you will be responsible for their debts and if they pay late each month, your credit score is the one that will be affected.

Not Having a Credit Card
The last thing that we wanted to mention on our list is not having a credit card. If you do not have a credit card or loan then you will not be able to start building up your credit history. Credit is very important in America, especially if you want to get home loans, car loans, or even sometimes just to get basic utilities set up. If you do not have a credit card today you should look into getting a low limit credit card to start your credit journey. It will take at least 6 months of having your credit card open before you will be able to qualify for a FICO score.

Final Thoughts
We at The Weller Legal Group hope that the information provided to you in this article helped you understand our top 10 list of things that can affect your credit score. Going through a bankruptcy is not the end of the world and may even be a great start to a fresh new beginning. We at The Weller Legal Group have over 20 years of experience in helping our clients with bankruptcies and improving their credit scores. We have offices located throughout Florida, including, Clearwater, Port Richey, and Lakeland. If you have any other questions in regards to filing bankruptcies or working on improving your credit score feel free to give us a call today at 1-800-407-3328.

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What Is A Good Credit Score?

Before we get into some of the reasons why it is important to have good credit, let’s first talk about what a good credit score is. Generally speaking, a credit score under 579 is considered very poor, 580-669 is fair, 670-739 is good, 740-799 is very good, and anything over 800 is considered exceptional. Currently the highest score you can achieve using the FICO model is a credit score of 850. Very few people will ever make it to this level but it is a credit score that we can all strive to achieve one day.

Getting A Job

This is the first reason we wanted to share with you on why it is so important to try and have the best credit score you can possibly achieve. In the world today, the job market is very competitive and many employers are now doing credit checks, with permission of course, on their prospective employees. This is especially true when it comes to government jobs and some occupations that have to do with the financial services industry. It’s a hard pill to swallow but having a bad credit score could very well get you rejected from the job of your dreams.

Getting Better Loan Interest Rates

The next reason we are going to discuss on why it is so important to have a good credit score is to get better loan interest rates. This applies to all types of loans, whether that be home loans, car loans, or credit cards. It is very important to have good credit so you will be treated fairly by the banks when applying for these loans. The difference between having good credit and bad credit could be thousands upon thousands of dollars over the length of the loan. People who have poor credit will qualify for much higher interest rates than someone who has a good credit score. Someone who has a good credit score will also usually be able to qualify for a much higher loan amount than someone with poor credit.

Getting A Rental Property

Something that a lot of young people today may not realize is that many landlords will look at your credit score when you apply for a lease contract. Looking at someone’s credit score can definitely help a landlord decide on whether or not he wants to approve you for leasing out his property. Someone’s credit score is not the only factor that your landlord will look at but it can definitely influence him in the decision process. When someone has a good credit score it tells the landlord that this person can make their bank payments on time and in the full amount which should transfer over to being able to make rent payments on time too. If you are looking to apply for a lease in the near future make sure to try and get your credit score up as high as possible before you submit your application.

Getting Better Car Insurance Rates

The next reason we wanted to discuss with you is your credit score could affect your car insurance rate. We are not saying you will get disapproved for car insurance if you have bad credit but you may not qualify for special discounted rates that someone else with good credit may qualify for. This can make a big difference over time because car insurance is something that you have to pay every single month. If you can get your credit score up maybe you too can qualify for those special discounted rates.

Getting Utility Services

The last reason we wanted to share with you on why you should strive to have a good credit score is to get utility services to your property. This may come as a shocker for a lot of people reading this but it is the truth. Many utility companies will look at your credit score to determine whether or not they will ask for a security deposit. If you have poor credit the utility company may even ask for a letter from a friend or family member to guarantee to pay your utility bill in case you decide not to pay your bills.

Final Thoughts

We at The Weller Legal Group hope that the information provided in this article helped you understand some of the reasons on why having good credit is so important to living a good life. Having bad credit can affect many areas of your life and make things much harder than they should be. We at The Weller Legal Group have years of experience in helping our clients with bankruptcies and improving their credit scores. We have offices located throughout Florida, including, Clearwater, Port Richey, and Lakeland. If you have any other questions in regards to filing bankruptcies or working on improving your credit score feel free to give us a call today at 1-800-407-3328.

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A primary benefit of working to repair credit is to reverse that status, over time and in steps that are proven to work for most people. Going from a place in life where every application for credit is met with “sorry – application denied” to “Welcome” is a huge improvement for those going through the process.

Having the ability to purchase a new car (or, even a used car) with a note and obligation to make periodic payments is life-enhancing. Applying for a new, higher-limit credit card is, likewise, a real step forward for someone who has gone from a 420-credit score to one that stands in the 650 to 750 range. People with “poor” credit are pariahs in the consumer credit world; people with “very good” to “excellent” credit ratings are, on the other hand, A-listers in that same milieu.

The ability to work freely in the area of obtaining and maintaining credit in a credit-driven society is a huge advantage for those who qualify. Credit, today, is the medium by which every type of financial transaction is undertaken – from making purchases that are small (from groceries to a haircut) to very large (a personal residence or a new car). Those who are “credit worthy” can use their sterling credit reputation and a pen to conclude these common types of transactions. Those who have bad credit histories and reputations know, intrinsically, that it is futile in most cases to even apply.

… a primary benefit of repairing bad credit is to become “credit worthy”. Successful credit repair is a process that gives individuals an opportunity to reverse their “status” in society – to go (over time) from being a “credit risk” to becoming a consumer who is pursued by lenders and consumer creditors, and thereby regain the ability to make purchases on credit…

Benefit #2: As noted previously, credit scores indicate the likelihood that a person will default on a credit card or loan obligation.

Having a low credit score indicates that a person is a riskier borrower than someone with a higher credit score. Lenders and companies that offer credit take “risk” into account when making lending decisions. One way to help ameliorate such higher risk with people who are “credit risks” is to charge them higher interest rates than their more credit-worthy counterparts.

Those with low credit scores who do manage to qualify for a loan or credit will pay more, over time, in the way of interest charged than those in the same boat who have a high credit score. This is simply a “fact of life” in the world of credit. It can be a very costly “fact”.

Interest rates have a huge impact on the cost a consumer pays for borrowing money. Loan payments are made up of Interest + Principal – low interest rate loans are easier to pay because there is less interest added to monthly principal payments. The length of time it takes to pay a loan, and the amount of total interest paid over the life of a loan are both factors that come with “benefits” when the interest rate is low rather than higher.

… another benefit of successfully undertaking credit repair is that the cost of credit (interest rates charged) is higher for people with bad credit. Likewise, other terms of borrowing (life of a loan, security required, etc.) can have a negative effect on people with bad credit or poor credit histories…

Benefit #3: Filing for, and completing, a bankruptcy can be the beginning of the credit repair process.

It is true that a bankruptcy showing on a consumer’s credit report is a negative that will remain visible for up to ten years post-bankruptcy. The fact that debts have been wiped clean (in Chapter 7) or paid down (in Chapters 11 or 13) pursuant to a plan are positive factors that redound to the benefit of the bankrupt consumer.

The “fresh start” that bankruptcy often affords a debtor is a part of the beginning of the credit repair process. A decided benefit of credit repair, then, is the fact that a consumer has the ability to move through bankruptcy and back into the world of consumer credit with an almost-clean slate.

Ancillary benefits also obtain after completing bankruptcy. For one, the stress of constantly trying to manage finances that are in disarray can begin to ease post-bankruptcy and as one begins to repair credit. Additionally, not having the burden of out-of-control debt can also relieve stress on personal relationships and in the work environment. Finally, the stigma that often attaches to people who have gone through bankruptcy – and even those who haven’t – is most often lifted when one goes from “credit risk” to “credit worthy”.

… ancillary benefits of repairing one’s credit include the relief of stress from dealing with “bad” credit, including stress at work and in personal relationships. The stigma of bankruptcy and of being a “credit risk” will also disappear over time… Credit repair allows people to “get their lives back” with a “fresh financial start”

Benefit #4: Finally, the fourth benefit to highlight is a compendium of advantages that attach when a consumer undertakes to repair his or her credit standing, worthiness, and risk factors. A credit-worthy credit history shows potential lenders that a consumer is likely to repay loans in full and on time. This will help a consumer lock in better rates and terms on car loans, home mortgages, and other financial products.

Beyond those factors, the advantages of good credit extend far beyond receiving better and lower rates on loans. The following are a few of those advantages:

• Qualifying for excellent credit card deals and offers – not all credit cards and credit card offers are the same. For people with very good credit, such deals include low interest rates,reward offers, and cash-back opportunities. Studies have shown that credit card “perks” encourage the continued use of cards for transactions which have the ancillary effect of boosting credit scores

• Receiving better car insurance rates – some insurance companies will factor in credit scores when setting monthly premium rates in order to better predict potential losses on customers. A low credit score will affect rates in a negative manner; a high credit score will have the opposite effect

• Landing a job – Some prospective employers will ask job candidates for their credit scores as part of the pre-hire process. They will use such information (after obtaining the job candidate’s permission) to look for “red flags” such as a prior bankruptcy or frequent delinquencies in payment to gauge whether or not a person who is a “credit risk” may also be an “employment risk”

• Improving chances of getting an apartment and no-deposit utilities – increasingly, landlords are looking at credit scores and reports to gauge whether or not a potential renter is a good risk. Likewise, utility companies now look at credit histories to determine whether or not a potential customer is required to put up a sizeable deposit before being taken on as a customer, or, in some cases, whether or not the customer needs a co-guarantor on the account

… the list of advantages to successfully undertaking personal credit repair include the areas of credit card worthiness, car insurance rates, and the ability to obtain a good job or suitable and affordable housing… the list is long and goes beyond the 4 benefits of credit repair as discussed in this article…

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Scam /skam/

verb
2. swindle.
“a guy that scams the elderly out of their savings”
synonyms: swindle, cheat, deceive, trick,
dupe, hoodwink, double-cross
(Merriam-Webster Dictionary)

The warnings are all out there – on the internet, in Public Service Announcements (“PSA’s”), and by word-of-mouth from consumer-to-consumer.

Do NOT fall for scams that promise easy, overnight “credit repair” or one-step “credit restoration”.

As any credit repair service or agency will gladly tell anyone with ears: “Credit repair can involve fixing bad credit in many ways… Many people, however, don’t have the time or don’t understand how to make their case, so they look into hiring a credit repair company…” (emphasis added).

Read that lead sentence (from a credit.com ad for THEIR credit repair service) carefully: “Many people don’t have the time…” and… many people “don’t understand” – two sure warning signs for consumers to guard their wallets when those are the first words in an advertisement (aka “come on”) by a – wait for it – credit repair company.

The consumer who is dealing with bad credit and thinking of hiring a “credit repair” company, agency, or “professional” will do him or herself a favor by first remembering the following:

credit repair businesses are, generally, for-profit enterprises.

First-and-foremost, these businesses are in the “game” to make

money (i.e. their first motive is not to help the consumer – rather,

it is to turn a profit and make money) …

Gullibly relying on “come-on’s” or “promises” is the first mistake that a consumer with poor credit should avoid. That consumer should ask: “is it a wise move to go deeper into debt – to a “credit repair service”, no less – to try to get out of debt and reestablish a good credit score?”

According to a recent report by the Federal Trade Commission (“FTC”), there are over 68,000,000 “score-able” consumers in the United States that have an average “credit score” that falls below 601 (meaning they have “bad” or “poor” credit). With a present total population of 326,766,748, the 68,000,000 represents over 1 in 5 of all Americans.

Put another way, 20% of the overall population is a fairly ripe number of prospects for credit repair outfits – many of them “predatory” and many of them fraught with “scams”.

Disclaimer: The above warning is not to say that all credit repair services or companies are “scam Mills”, “fly-by-night” predators, or “out to fleece” unwary consumers. The warnings are stated in the spirit of caveat emptor – “let the buyer beware”.

Non-Profit vs. For-Profit Credit Repair

Non-profit “credit repair” is usually couched in terms of “credit counseling services”. Non-profit credit counseling organizations receive funding from creditors. Such funding allows those agencies to provide services to anyone regardless, of income levels, at a lower cost. Such organizations do charge fees (remember this: “there’s no such thing as a ‘free’ lunch”). Those are usually minimal. For those in severe financial hardship, fees are often waived. And, no one is turned away because of an inability to pay or they are just shopping around for alternative debt management solutions.

By contrast, for-profit credit repair or counseling services charge fees that are generally much higher because of the profit motive and the need and desire to make a profit. With the for-profits, additional and alternative funding sources are not available to offset any of the costs to the consumers.

One highly-regarded and well-known non-profit credit counseling organization is American Consumer Credit Counseling (“ACCC”). The ACCC is approved by the Department of Justice to provide pre-bankruptcy credit counseling and, for those who ultimately file for Chapter 7 Bankruptcy, post-filing debt management education and counseling. The ACCC provides a wide range of services, from credit counseling, pre-bankruptcy services, and post-bankruptcy filing education.

Most for-profit agencies deal primarily with the three major credit reporting agencies (i.e. Experian, Transunion, and Equifax) and focus primarily on “repairing” errors and inaccuracies in a consumer’s credit report.

Repairing Credit on Your Own

While dealing with “credit repair” and “restoration” may seem like a monumental task, it does not rise to the level of “rocket science” by any standard. Granted, most people with credit “problems” are stressed. They may find any task that takes time away from their family, a job, or everyday endeavors onerous and burdensome. Stress and credit problems go hand in hand and that is a given. However, dealing with credit repair issues and taking charge can be reduced to about five or six fairly easy, manageable steps. Consider the following:

Step One: Know your credit situation – find out how “bad” it really is.

A consumer should begin the process by obtaining copies of their current credit reports from each of the three major credit reporting agencies. Every consumer is entitled to obtain – FREE of charge – an annual copy of a credit report from each of the agencies.

The annual free report can be obtained from: www.annualcreditreport.com or by calling: (877) 322-8228.

Step Two: Once a consumer obtains current copies of all three credit reports, the next step is to study them carefully, looking for errors or inaccuracies.

First, check all identity information such as names and name spelling, social security numbers, and address information. Errors in identity information will have a negative impact on credit scores.

Second, examine information relating to credit cards, outstanding debts, and major purchases for accuracy. Mistakes and errors will likely be found. In that case, make a copy of the report in question and highlight the questionable entry or entries.

Third, write a letter to the reporting agency in question (a copy can also be sent to the “data furnisher” for the questionable entry – but – the “complaint” should be directed, first, to the credit reporting agency). All records should be retained, and all notices, complaints, disputes, and follow ups should be in writing and sent via certified mail – return receipt.

Step Three: Work diligently to clean up credit AND live within your means going forward.

This means consumers working to “clean up credit” should pay all bills on time 100% of the time, pay down debt – especially credit card debt – and avoid incurring new debt, and avoid applying for new credit (i.e. loans, credit cards, etc.).

Step Four: Don’t miss payments and don’t be “late” on making payments when due.

Consumers who are “behind” in paying debts – especially credit card debt – should do all they can possibly do to “catch up” and become current. The single most important factor affecting a credit score is ON-TIME payments. Miss a payment, or even pay “late” will negatively affect a credit score. Always being on-time and NEVER late will help repair credit and have a positive affect on a credit score.

Step 5: Credit cards can be the ultimate nemesis of a consumer. They are easy to use and even easier to “abuse”.

Managing credit card debt is one of the best ways to improve credit scores and credit. Consumers should work diligently to pay down credit card balances, not over charge credit cards, and avoid applying for new cards (or any “new credit” at all) while working to positively improve a credit score and reputation.

Conclusion

Not all “credit repair” companies are evil, and not all are out to perpetrate a fraud against debtors and consumers. But – remember the watchword phrase caveat emptor and always beware.

Non-Profit credit counseling agencies exist and generally charge less than for-profits.

In the end, a consumer seeking to improve his or her credit and/or credit score may be well-advised to give it a shot to work on their own at NO cost out-of-pocket.

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Most people who take the step of filing a bankruptcy petition have been in a state of fret and worry for months – maybe years – in the period leading up to the filing. The constancy of vexing collection calls, the threats of legal action coming from all sides, and trying to “manage” bad credit while still living day-to-day must be a “living nightmare” for those who find themselves in severe financial straits.

In a Chapter 7 (“liquidation bankruptcy”), relief from the hassles and harassment of collection efforts comes instantly with the filing of the petition. The automatic stay provisions for all bankruptcy chapters “attach” with the filing. This means that ALL collection efforts (foreclosures, wage garnishments, and even the collection calls that come day and night) are halted by the stay.

Many people struggling to “manage” bad credit are not aware of this stress-saving provision of the Bankruptcy Code. For those who are aware of it, the automatic stay provision and its immediate positive effect for the debtor is the #1 reason debtors file for bankruptcy in the first place. That is – to obtain a large measure of relief after months and years of worry.

Post-bankruptcy, a Chapter 7 bankruptcy discharge gives the debtor the relief of a clean financial slate. Along with the relief obtained, however, the Chapter 7 discharge gives the debtor the new worry that he will never have decent credit again.

If a debtor was eligible to file for Chapter 7 bankruptcy, chances are his finances were in shambles and he had nothing more than a pile of credit obligations and monumental stress to show for it. That however, is decidedly different from a common misconception – i.e. that bankruptcy will ruin a person’s financial future in perpetuity.

As a matter of simple truth, a bankrupt debtor can begin to restore his credit immediately after receiving a discharge of prior debt and obtaining the much-sought-after “clear financial slate”.

While the record of a bankruptcy will remain on a debtor’s credit report for up to ten years, the negative impact will fade over time. A debtor can help offset the negative impacts to a credit report by working to add positive comments and information to the report as a step toward rebuilding and repairing credit.

Bankruptcy – and especially Chapter 7 Bankruptcy – is a form of credit repair.

Four Reasons to Repair Credit After Bankruptcy

Rebuilding credit post-bankruptcy begins… immediately.

Strict budgeting, obtaining secured credit or a small loan, on-time payments on ALL debt, and other measures are all key factors.

Reason One: The “old ways” of dealing with finances – how a debtor got into trouble in the first place – need to be replaced with sound, consistent financial management practices post-bankruptcy.

Begin with the basics

The first step is to create a monthly budget (*) that tracks both income and expenses. A budget will help a debtor avoid overspending.

The budget will also help with building an emergency reserve fund. According to recent research by the Urban Institute, it’s been established that having as little as $250 in a savings account for an uncommon or unexpected expense helps protect families from having to resort to payday loans or charging beyond the budget. A reserve fund, once established, needs to be grown on a regular basis; reserve funds become savings accounts.

A primary “rule” in rebuilding credit is to avoid starting a new “debt spiral”

(*) Note: “Budgeting” should have been explained and discussed in the Pre-Discharge Counseling in Chapter 7 Bankruptcy. Assistance is also available through non-profit Credit Counseling Agencies that offer fee basic consumer help on a range of issues, including budgeting…

Post-bankruptcy, individuals need to change their habits. They need to adopt new methods and strategies for handling their finances. They must be consistent and persistent in all of their efforts. Trying to repair one’s credit post-bankruptcy is a lot like trying to stay sober after having gotten “cleaned up” – it’s a “one-day-at-a-time” proposition and consistent persistence is an absolute must.

It is, after all, possible to “fall off the credit repair wagon” just as it is possible to “fall off the wagon” of sobriety.

Reason Two: Credit repair requires a credit “strategy”. Having a credit and financial affairs strategy is both a requirement and reason for undertaking credit repair and restoration.

The first step is to do a thorough assessment of the current financial situation using a credit report (*) as the starting point.

Credit Reports give a comprehensive look at financial situations, the root causes of lowered credit scores, and the like. The information contained in a credit report can be very helpful in reestablishing a good credit rating and maintaining it over the long haul.

There are three major credit reporting agencies in the United States – they are, TransUnion, Experian, and Equifax.

All individuals are entitled to one free credit report from each of the three major reporting entities, every 12 months.

(*) Note: Annual free credit reports from the 3 major credit reporting agencies is mandated by law and by rules of the Federal Trade Commission. Annual reports are available, free of charge from annualcreditreport.com (this website is the only site authorized by the federal government to provide this service)

Another consistent step to adopt and take is to keep track of your credit score on a monthly basis. There are several websites – such as NerdWallet – where free credit score resources are available. A caution is due here – when using a credit score, be sure to consistently use the same source and criteria each time to avoid “apples-to-oranges” comparisons from month-to-month or source-to-source.

Keep in mind that post-bankruptcy there will be fresh negative credit information on the debtor’s credit report – the bankruptcy will show on the report for ten years post-bankruptcy. Any debtor can (and should, consistently…) challenge information that is in error, outdated, and/or misleading.

Reason Three: Being viewed by lenders and other credit providers as “risky” is a consequence of having a poor credit reputation. Changing how lenders view a post-bankruptcy debtor is another reason that credit restoration after a bankruptcy is a positive choice.

For troubled debtors, their pre-bankruptcy payment and default history makes the debtor look like a “credit risk” to lenders and others who determine who gets and who doesn’t get a loan, a credit card, or even an apartment.

As part of a credit repair strategy, debtors can provide extra assurances to lenders and others that they will not be on the losing end if they lend money to the debtor. Experts in the field of credit repair point to four ways that are helpful in getting credit and improving credit scores. Those are:

• Obtain a Secured Loan – either by borrowing against money already on deposit with a credit union or community bank – or – having the loan proceeds deposited in an escrow for release upon completion of payments
• Obtain a Secured Credit Card – and use deposits to the card as “secured credit” (the card is used like a regular credit card, and the “credit limit” on the card is typically the amount placed on deposit against the card)
• Obtain a Co-signed loan or credit card – usually with a close friend or family member who is willing to risk damage to his credit reputation in case of a default or other negative action
• Obtain “Authorized User” Status on another’s credit card – with an understanding that the payment activity of the authorized user is reported as if he were the owner of the account

With all of the above, it is important to ascertain up front: 1) if the credit union or commercial bank reports activity to all three credit reporting agencies; and, 2) with an “authorized user” account, make sure that the authorized user’s payment and credit-building activities are likewise reported to the Big 3 reporting agencies.

Reason Four: Maintaining good credit, once “repaired”, is key. Climbing out of debt is never easy – not falling back into “old ways” is difficult. The end result – credit that one can take pride in – is the fourth reason to undertake credit repair and restoration.

Rebuilding credit is a slow process. It will take years to attain a respectable credit score and a clean credit report. In the beginning, post-bankruptcy lenders and others who determine credit worthiness will be wary of a debtor who had to file for bankruptcy.

There are, however, several factors that will work in the debtor’s favor. For one, since a recently discharged bankrupt is estopped from filing for bankruptcy for eight years after a previous discharge, lenders have the security of knowing that short-term risk has thereby been ameliorated somewhat.

Another factor that tends to work in a debtor’s favor is having to accept lesser types of credit (i.e. “secured” or co-signed cards and loans). Lenders want to “test the waters” before treating a debtor who has gone through bankruptcy in the same manner as those who haven’t suffered that fate.

Once a debtor gets a lender or multiple lenders to extend credit, it is critical for the debtor to make all payments on time, every time. Those working to reestablish their credit cannot afford to suffer even one late or missed payment. Additionally, debtors are advised to keep their balances low – less than 30% of the credit limit is advisable, and less than 10% is ideal.

Keep in mind that those who extend credit report to all three credit reporting firms every month without fail. On-time payments, no late payments, and maintaining good credit practices will show up on credit reports immediately. Each on-time payment is a PLUS or positive – just one late payment or missed payment can send a credit score plummeting.

Lenders and other credit extenders are constantly vigilant for both positive AND negative credit activity. Positive activity always HELPS in restoring credit; negative credit activity, likewise, always HURTS the process and the debtor.

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