Credit Concerns In Bankruptcy

: Reese Baker & Associates

  Filed under: Credit

creditIt is a common concern of most people that filing for bankruptcy will damage your credit. Not only is this a  myth, it actually has prevented people from getting the relief they desperately needed. While there are some credit challenges that come with bankruptcy, there is certainly more damage to be done by not filing for Houston bankruptcy.  Here is what you need to know:

1. Credit damage is already done — If you have high debt balances or missed payments, chances are your credit has already suffered. Carrying a delinquent account status is also a quick way to chop down your credit score. For  most people, these damaging effects to credit happen long before they consider bankruptcy and are already suffering poor credit.

2. Credit scores improve — A simple bankruptcy filing notation on your credit score does nothing for the actual calculation of your score. However, when your debts are discharged in a bankruptcy your lowered or eliminated debt balances and account statuses marked as resolved do have an impact on how your credit score is calculated. This means that your credit score can begin to improve after a bankruptcy.

3. Credit rebuilding takes time — Kind of like most things in life the negative outcomes of your habits add up far more quickly than positive ones. Credit is no different. Your credit can tank in a matter of days to weeks, while credit rebuilding takes time. After your bankruptcy it is important to understand the ways to boost your credit and establish a positive credit profile.

4.  Credit in the future should have a plan –Getting credit after a bankruptcy should be pursued with a plan in mind. Don’t take the first credit offer that comes along, you do have the right to shop around and find a line of credit with favorable terms and conditions. Using credit should also be pursued with a plan, so know what you can afford to repay per month before you make a purchase. Keep your debt balance below 30% of the available limit on the line of credit to ensure you keep adding points to your credit score and not taking away.