Credit repair after bankruptcy

How does your credit look after bankruptcy?

After getting your bankruptcy discharge you need to prepare to tackle the task of making sure that credit entries in your credit report are not still showing delinquent accounts. Anything that should have been included in bankruptcy needs to be labeled as such. About 3 months after your bankruptcy discharge you need to take a close look at your credit report and fix any erroneous entries. These can cause trouble for you down the road qualifying for credit, loans, jobs etc.

You’ll be able to get your credit report from all three credit bureaus by visiting Annual Credit Report, everyone is entitled to a free credit report per year. When you get your report you are very likely to find accounts that have not been cleared after filing bankruptcy. It’s common for creditors not to bother to make these updates especially since they’re not getting paid, they’re certainly not interested in doing any favors. However, you must correct these errors yourself.

Repairing your credit report after filing bankruptcy

Ideally you’d want to wait from 3 to 6 months to get your credit reports and start spotting anything that should have been included in bankruptcy. If you find that accounts that should now be closed are still open and delinquent, then what you need to do is make a copy of your bankruptcy schedules and discharge documents and start a dispute with the credit reporting agencies (Transunion, Equifax and Experian). Your discharge papers are the key to get this resolved. This can also take sometime since the verification process is slow.

Hiring credit repair services will work better for anybody, it’s definitely a good option, just be ready to provide your bankruptcy documentation. Credit repair agencies are more effective at doing this, however you must take care to hire only a legitimate credit agency for this industry is filled with scams.

Bounce right back after bankruptcy

Repairing your credit is only one aspect of getting your financial life back on track. You have to now work a little harder to convince creditors that you’re still worthy of getting credit. Even after you get your credit entries corrected, you should know that your bankruptcy file will remain on your credit report for up to 10 years, however that big dark cloud can being to dissolve with positive credit entries that you should be striving to achieve.

There are several ways to regain control of your credit after filing bankruptcy, depending on what you want to accomplish, be it a mortgage, auto loan or a credit card. Your credit report must accurately report your financial history for you to begin rebuilding. Once you do that there many programs that offer bankruptcy credit cards, personal loans and mortgage loans after bankruptcy. Read the post on Getting a mortgage after bankruptcy for more info.

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Some Credit Repair FAQs

Not everyone can be a credit expert, most of us are only content with a decent credit score and often don’t bother to find out enough about how credit works, much less what it takes to repair credit. This credit thing can be complicated but like anything else it can start to make sense once you understand what you need to do to steer clear of trouble and to seek appropriate help when you do find yourself in trouble. Here’s a short list of FAQs about credit repair that I think will shed light on some of the most common questions I’ve found people to have doubts about:

What is the Fair Credit Reporting Act all about? The FCRA is a federal law that governs the collection, reporting, and use of consumer credit information. What does this mean to you? These are specific regulations that are in place to protect consumers, without them you’re basically at the mercy of your creditors and credit bureaus. The specific code can be found here.

Does credit report really work? Yes, when used correctly. And it is absolutely essential that you do all you can within your powers to make sure that your inaccurate negative entries are fixed. Ignoring them will eventually affect your quality of life and no one else has the responsibility of making sure it is accurate but you. Credit repair works and it works particularly well when you make use of the right resources. For more information read the previous posts on credit repair.

Can I remove negative entries from my credit report on my own? You can most certainly repair your credit on your own. You need to begin by first getting a copy of your credit report from all three bureaus, you’ll find often that they differ by a lot and sometimes the inaccuracies do not spread across the board. Review all entries that you feel are inaccurate and begin your dispute process by contacting the credit bureaus through their dispute systems listed here:

TransUnion Credit Disputes 1-800-916-8800

Experian Credit Disputes 1-888-397-3742

Equifax Credit Disputes 1-800-685-1111

You may find that depending on the seriousness of the credit inaccuracies, some of these negative entries will prove to be more difficult to correct than you expected. The process may take longer or you may be denied by either the creditor that reported the entry or the credit bureau.

If I fail in my dispute with the credit bureaus, should I contact the creditors directly? Of course it won’t hurt to try, however you’ll need concrete proof that their negative entry was wrong. Bringing up an argument that you remember making the payment on time will not cut it. Creditors will listen but they won’t volunteer help, they’re looking for concise proof that they were wrong and since consumers don’t know the law and don’t have the resources some credit repair agencies have, they’re not likely to be as successful in these credit disputes.

Can credit repair agencies really help? Yes and no, that all depends on the status of your credit report and the circumstances around your inaccuracies. I’ve mentioned throughout credit posts on this blog that if you have accurate negative entries in your credit history, you are probably not going to succeed at removing them from your credit report. However, when it comes to the entries that are truly inaccurate, you have some options and the most effective one to take is to hire a credit repair agency.

With that said, you now have a new problem, and that is to find a reputable and honest credit repair agency to handle your case. It should not surprise you that the field of credit repair is filled with scams. Anyone can pose as a credit repair agency, get a catchy name and throw a website together and offer you their service. Making sure that you’re dealing with legitimate companies will save you time, money and a lot frustration. Once again start your search with the BBB and make sure that your candidates are legit.

How long can negative entries remain on my credit report? There are varied opinions on this issue, I have heard them all. It goes from 7 to 10 years, depending on the type of entry it is. For example a defaulted loan account will remain as such for 7 years even after you pay it off, whereas a bankruptcy will stay on your credit report for up to 10 years. Meaning that these periods can change for a variety of reasons that in fact only credit bureaus know about. It probably would have to do with an increasing number of consistent positive entries in your credit history that would eventually bump any old negative entries off the map.

How long will it be till the credit bureaus respond to my dispute? The Fair Credit Reporting Act states that credit bureaus shall respond to you withing 30 days of having received your dispute letter. Just remember that the credit bureaus can exercise the right to use their own discretion in the consideration they give your dispute. Because credit bureaus deal with so many frivolous requests and the dispute system is heavily abused by scam artists and illegitimate credit repair companies, they can simply deny process of the dispute without specifying a reason why.

Will removing negative entries really raise my credit score? That’s the general idea, however don’t be surprised if your score remains the same for a while. Despite what some credit repair companies may claim, credit repair may not cause the immediate results you were hoping for. The computer systems that calculate your FICO score work with the available data and time to determine your overall score. If you have several negative entries in your credit report but only some of them are inaccurate your score will probably climb a little slower as well after you repair them.

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Credit repair, go it alone or hire an agency?

If you have any experience as a consumer, you know that your social security number equals a credit report that has entries reflecting your financial habits and overall worthiness as a responsible consumer. You should understand by now that credit bureaus and creditors are not infallible, they can make mistakes on your credit report unknowingly, and unfortunately, it is you who must catch these inaccuracies and fix them.

Credit Scores - the warm and fuzzy creditors love.

Credit reports are more than just a list of accounts with their payment history, yes it’s true that creditors love to see lots of green tabs and positive check marks on your credit history. But lately, one of the most important factors and probably the deciding factor in whether you get credit approval or not is your credit score.

This three digit number speaks volumes to anyone researching your financial life. It’s no surprise that so much emphasis has been placed on credit scores in the last few years since that’s the first impression creditors get from you. Consumers have also gotten more apt to actively manipulate their scores by doing certain things that can legally raise their scores. From making larger monthly payments, to paying in full and then borrowing again, to fixing inaccuracies in their credit reports either alone or by hiring a credit repair agency.

What to do about credit inaccuracies.

Many people today are living with credit inaccuracies and outdated information, mostly for lack of knowledge on what to do about them or simply because they don’t even know they’re there. These entries vary from late payments that were never late, to closed accounts that still show as open, to defaulted accounts that should be included in bankruptcy, etc

The Fair Credit Reporting Act established for consumers the right to dispute credit entries for free, however the process is often lengthy and complicated so handling it on your own is definitely the hard way of doing it and although you can save you money this way it can’t guarantee results.

Hiring a credit repair agency would be a better approach, BUT! Proceed with caution. What does that mean? Well, you can’t erase accurate entries from your credit report nor can any credit repair agency. No one has these magical powers or special ways of doing this. I mention this because there are in deed a lot of scams in the field of credit repair, so many in fact that it’s really hard to tell anymore if an agency is legit or not.

If you have true inaccuracies and outdated information that needs to be fixed then by all means begin by consulting a credit repair agency and get a good feel for how they work and what it is exactly that they intend to do for you.

Finding reputable credit repair agencies.

Just like you shop for auto insurance or a primary care provider, you should take care of doing the proper screening when looking for a reputable credit repair agency. The Better Business Bureau is not a bad place to start your research and definitely only consider those companies with satisfactory records.

Also it’s important that you know that the Credit Repair Organizations Act establishes that these agencies must follow specific guidelines in order to protect consumers. You should be made aware of these and be given any disclosures before you sign anything. Your contract should have the following information:

• Terms for Services, which should include any limitations and disclosures.
• A detailed description of the services to be performed and their total costs.
• The time it will take to achieve the promised results.
• Any guarantees they are offering you.
• The Agency’s name, Point of contact, business address and website.

Be suspicious of any company that does not have a website, this is a sign that they’re not well established or not established at all and you could be dealing with someone whose intent is to run with your money. On that note here’s a list of tell tale sings that you may be dealing with a professional scammer and not a legitimate credit repair agency:

• The agency representative asks for payment before the services are provided. According to the Credit Repair Organizations Act, this is a violation and more than likely you’re not dealing with someone who adheres by these laws.
• Outrageous promises, like removing all bad entries from your credit report to include your bankruptcy record, any judgments, leans etc. Once again, “no one” has the power or right to do this, if the entries are accurate.
• The agency representative insists that all credit entries are disputable and encourages you to participate in your own dispute by sending letters to the credit bureaus. This is based on the theory that if creditors do not respond within 30 days the entries can be erased. The process of verifying credit entries today is much easier than it was 5 years ago, it does not take 30 days to verify these entries, they can be done within hours of receiving the dispute.
• The agency representative suggests or lays down a plan for you to get a new identity under a new social security number. Should you hear these words come through the phone line, simply hang up immediately and report the agency. You do not want to willingly participate in such procedures, you will be held liable for such actions and prosecuted by the federal government. This is a felony and it is very serious!
• The agency representative makes outrageous claims about their experience and the number of clients they have helped, yet has no way of proving it, or insists on you reading testimonials on their website or pamphlet. Never base your decision on testimonials these are heavily abused and never worth the time reading anyway. The best testimonial you can read is that which the Better Business Bureau provides for its registered companies.

Should you want to consider giving it a go on your own, visit the Federal Trade Commission’s website and at the bottom of that article you’ll find a sample dispute letter that you can tailor to your situation. Keep in mind that this approach will take you more time and effort, but it is most certainly possible to achieve the same results if you truly believe that you have inaccurate entries on your credit report.

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Does credit repair really work? Part I

Credit bureaus are not infallible and neither are the creditors that report your credit history to the bureaus. Mistakes will happen, and often times the bureaus do not make it a priority to deal with these mistakes even when you bring them to their attention through their own dispute systems. That’s where credit repair agencies come in, but can credit repair really work for you?

If the information on your credit report is accurate, then there is not much that can be done to change it. However, as I mentioned above, mistakes will happen and it’s important that you keep up with your credit report and address the inaccuracies yourself first. The best time to use a credit repair agency is when there are items that prove difficult to dispute, especially if it involves life changing events, such a death in the family, a divorce, identity theft etc.

A lot can be recorded on your credit report during these events and it can get messy. These are the perfect situations for you to hire someone else to deal with this for you, and it is in situations like this that credit repair can be most successful if there are true inaccuracies on your credit report. You should hire a legitimate credit repair agency that can address these problems correctly and professionally. One thing to keep in mind is that entries that involve small debts will be easier to deal with, normally larger debts are much harder to dispute even for an experienced agency.

There are legitimate companies that can in fact help you repair inaccuracies on your credit report and they have been doing it for years, which is a factor you must consider when deciding which company to hire, how long have they been doing this? There are also a lot of companies that can not really help you do anything, but will be glad to take your money if you let them.

During the much needed research that you will do to find the right agency, you’ll more than likely come across a lot of different sources that advertise aggressively. Beware of the flashing signs and pop up ads that “guarantee” removing all negative entries from you credit report. This is just not possible if the information is true. You can’t hire an agency to repair your credit just because you don’t like what you see on your credit report. If you had late payments, defaulted loans, or filed bankruptcy, you should expect to see these entries on your report. Hiring someone to fix these entries will only prove to be a waste of money.

Back to finding a reliable company to hire for you credit needs. You need to scrutinize a lot during this process, and I’d like to give you the first source where you need to begin your research. The better business bureau (BBB) keeps record of companies who offer goods and services and makes it available to consumers so you can review their track record. Businesses register with the BBB because they want to show they’re committed to quality service. In a way you’re looking at a company’s resume or credit report if you will, when you research them via the BBB.

Enter the words credit repair in the search field at the above link and you may be a little surprised to find that there are only a handful of credit repair agencies that are registered with the BBB. The search results will also display credit repair companies that are not registered with the BBB. It’s possible that more of these companies that are not registered could also be reliable and provide good service, but I would start with those that are registered and have a track record you can study.

Inaccuracies or not, this may get a little expensive. But you stand to be more successful by hiring a legitimate company with a good track record that has a lot of experience doing this, so be ready and budget yourself carefully.

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