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Understanding Credit Score and How to Rebuild it After Bankruptcy

May 20, 2020

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In the finance market space, a credit score is considered as the parameter of an account’s reputation. This is ko is a numeric figure which decides whether your account it is reputable enough to get more credit or not. Experian, TransUnion, and Equifax are three major credit bureaus that prepare credit reports of every account holder on the basis of their previous track record. As per the FICO parameters, the credit score of an account ranges between 300 to 850. Here 300 is considered as the lowest figure whereas 850 is excellent. Our credit score is affected by four major factors including:-

●       Payment history

●       Credit history length

●       Amount owned

●       New credit

Any kind of irregularity in payments is the main influencing factor why our credit score goes downward. A stage comes when we also have to go through bankruptcy. The question is, how to rebuild credit score after bankruptcy. Actually, it is a long-term process that may take almost a year to bring back your account reputation at a good level. Here we will give you some tips that are easy to follow.

Tips to rebuild credit score after bankruptcy

Before following any tips or tricks, it is important to understand that you have to create a budget for various credit building activities. If no adequate fund is available, approach a nonprofit credit counseling agency. Now let's start with the proven methods of building a credit score.

●      Check for credit report errors

the first step to consider is getting a free credit report online and check for errors. Sometimes, we keep on paying the remaining credit but it was not showing in our credit report. Even if an account was discharged from bankruptcy due to regular payments it will continuously show you bankrupt and tell the error was not rectified. You can hire an agency expert in restoring credit after bankruptcy.

●      Positively maintain a non-bankrupt account

If you have multiple accounts, maintain the payment flow positively in the non-bankrupt account. If there is any remaining balance to pay as loan or alimony payment, clear everything as soon as possible. It will surely help in improving your credit score.

●      Get a secure credit card

the secure credit cards are something different from a normal credit card. They are issued after baking by a certain amount of cash deposit. This deposited amount is considered as collateral and mortgaged if you fail to pay the credit amount. Make most of your payments with this card. If you make timely payments for this secure credit card, the credit limit and credit score will automatically increase. After monitoring your positive track record, the card also turns into the unsecured category. If possible, you can also apply for credit builder loans.

●      Payments reporting to the customer credit bureau

Whenever you make any payment, make sure that it is being reported to the credit bureau agencies.

These are the four proven tips of rebuilding credit after bankruptcy faster.