Many consumers file for bankruptcy each year. Filing for bankruptcy previously was a no-no, but today a filing is so common that hardly anybody gives it a second thought. The reasons for a bankruptcy filing can vary – unemployment, sickness or illness or plain misfortune. Federal law allows debtors who can prove they are unable to pay their bills the chance to get debts forgiven legally. But this process is not simple. You have to pay a price for getting a new lease of life. The debt relief filing will blot your credit report for nearly a decade. The forgiven bills are treated as taxable income.
There are companies that advertise credit to people who have just been cleared by bankruptcy court. Companies don’t give credit to the newly bankrupt out of kindness; they know that once you are cleared by bankruptcy court, you can’t file for bankruptcy again for next 8 years. Your credit card will be costlier than the normal card, and you will be charged higher interest rates, but will give you a credit card after filing for bankruptcy.
These are some suggestions that can help you improve your credit score after debt relief:
Get a leading card. The big banks won’t give you anything immediately; you’ll have to make do with costly cards from lesser-known banks. An account with Chase can improve your FICO score a lot more than a credit card from a local bank. When possible, apply for cards from bigger providers, since they get more respect from the bureaus.
Request a higher credit limit. Credit bureaus operate on a debt-to-credit ratio when deciding a score, to measure the amount owed as against your highest possible debt. Ideally, you should owe the least possible as compared to your available limit. Your FICO or credit score is decided partly by the amount of purchasing power available with you. A hike in your available limit will sort the problem immediately. Higher the limit, better your debt-to-credit ratio.
Take the expensive bank cards when you are given them and use them carefully, there is hardly any other choice. Make frequent purchases and pay the bills promptly. If possible, make full payment in order to save the hefty steep interest rates that undoubtedly be levied.
Getting over bankruptcy is difficult, but can be done. Reestablishing financial reputation needs hard work, but given time, it is possible.