July 27, 2016
Life after Bankruptcy – 10 Strategies to Rebuild your Credit Score
Bankruptcy inflicts financial misery on more than a million Americans every year. This is most damaging thing that can happen related to credit reports. A bankruptcy may be listed on your credit report for up to 10 years and there is a good chance your credit score will be rather low until you take the necessary steps to rebuild your credit. Rebuilding your credit score after bankruptcies is the real way to get back on a better financial path.
Take necessary steps to rebuild your credit score. But before that, it is important to understand why it is effective for creating a great financial future. While applying for car loans, credit card, the financial agency or say banks first looks at FICO score and credit history to determine the liability of applicant. If the FICO scores are amidst 700 or more, means you have good score, but if lies below, it needs rebuilding. Here are some suggestions for rebuilding FICO score after bankruptcy. Adopt these strategies to rebuild the score that all work, to some effect.
- Rebuild your credit score with a secured credit card: You may need to apply for secured credit card once come out from bankruptcy so you have the convenience of not carrying cash. With secured credit card, you make a deposit into its account and you can make charges out of it like a regular debit card.
- Keep paying non-bankruptcy accounts on time: All loans are never included in bankruptcy. Keep paying on non-bankruptcy accounts on time, as positive payments will improve your credit score. Also, keep up payments on accounts that aren’t on credit report because this could be reported later and cause downfall in credit score.
- Review the credit report: If there’s bankruptcy on your credit report, it does not mean you ignore reviewing it. Review the credit report annually and obtain a copy for any erroneous information or inconsistencies.
- Pay bills on time: Prioritize on time payment of bills and due to prevent non- essential spending. Set up reminder on calender to pay bills every month on due date.
- Do not close accounts: Closing account and swearing off all credit card is not the right action to build credit score. Rather, it reduces the amount of credit available. Therefore, it is better to keep the credit lines open.
- Avoid utilizing a large amount on your credit available: Utilization of high credit during bankruptcy signals to financial trouble. Keep your debt balance to 20% or less than the credit limit all the time, even pay of the balance in full each month.
- Make a budget and limit your expenses: Figure out what you can afford to pay every month on your debts. Your budget will help manage cash flow and prevent from racking up unnecessary debt. Know the limits on your credit card to keep your balances below them.
- Add a loan down the road: Credit loans are like secured cards, which are often small amounts and are reported as positive account as long as payment are made. Buy a vehicle that is affordable and you can pay off successfully. Your credit scores will climb without any fail.
- Paying of debt: Paying of debt on time is No.1 method for improving credit score. If you have debts then bankruptcy could not wipe out. The credit score may fall and you would not get a new credit. You could erase a bad credit history and stay under a healthy credit limit.
- Go out of guilt and shame: Many Americans battling the lingering effect of great recession. Let of the shame to go and don’t dwell on negative thoughts. Adopt the right attitude, become more disciplined and educated, not to repeat the mistake again.
Summary: Rebuild your Credit Score
These 10 suggestions will surely work to build credit after a bankruptcy. However, the most important lesson is to be patient and follow the guidelines, uninterruptedly.
March 6, 2015
Prepaid Credit Cards (Secured Credit Cards):
There are basically two kinds of credit cards available for the people, who have a bad credit. These are the prepaid cards and the secured credit cards. So, if you have a bad credit history, and require a credit card for yourself, you can check out both the cards.
Some Information on Prepaid and Secured Credit Cards
Both these cards are separate and are not to be mixed. While, both these cards require money to be deposited prior to using them, they are quite different from each other in all the other aspects. For getting the secured credit card, one will need to make security deposits against credit limits, so that the card can be approved. This security deposit is kept in the savings account, and will be used when there is a default on payment on the credit card. The purchases that are made with these cards will go against the revolving credit limit. When the credit card balance is paid off, the available credit increases again. The security deposit is there on these cards because of the bad credit history of the borrower.
Prepaid cards work in a different way. These are actually not credit cards, as there is not credit limit. The deposit made on the card goes straight into the account, and when the card is swiped for purchases, the balance is deducted directly. So, when the deposit is spent, one would have to redeposit the money, so that he can start spending again.
The fees on these two cards vary. The fees on the secured card is quite similar to that of credit card, with application and annual fees, late fees, and finance charges. Some of these fees can actually be avoided if the card is used responsibly. The fees on the prepaid cards depend upon the card that you choose. It could have monthly maintenance fees, activation fees, etc. Other than that, fees might have to be paid for reloading the money, and withdrawing the money from ATM.
So, the choice of the card is totally dependent on you. If you wish to improve the credit score, you should go for the secured credit card. These cards can be converted into unsecured cards after the completion of 12 or 18 monthly payments. And, for people, who wish to avoid the banks, can choose to go for the prepaid cards. These are also good for the students and teenagers, who get monthly allowance from the parents.
These cards can be a great way to make your payments and, if they report to the credit bureaus, build your good car credit.