How to avoid bankruptcy and have good credit score

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How to avoid bankruptcy and have good credit score
2 years ago
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If you file a bankruptcy, you will surely find it difficult to purchase high-ticket items on credit or take out new loans. This is because a bankruptcy will reflect in your credit history for at least 7 years. Still, there are a couple of things you can do to prevent bankruptcy and re-gain the trust of creditors.

From this day forward, the very first thing you must be sure to do is to make your bill payments on time or even early, if possible. Take note that any payments that are late, especially the ones that are paid over 30 days later than the due date, will definitely affect your goal of building credit.

If you already know that you will have trouble paying your bills on time, you should find a way to lower the amount or lessen the things you have to pay for. Also, if you are still carrying credit cards, it might be a good idea to cancel them, especially if the ones you have are of high interest. All you have to do to close your accounts is to write a letter of request to each credit card company. After each account is closed, be sure to check your credit report, and verify that these accounts are reported as closed in all credit bureaus. These include Experian, Trans Union, and Equifax.

Of course, you may still choose to keep your credit cards. Just be sure to pay them on time. Other things you should pay off as soon as possible are high interest loans, student loans in default, and unpaid tax liens. All of these debts should be paid off even if you have to use the money you have in savings and other financial assets. You may also seek help from family and friends for this as these are the worst types of debts to have. The quicker you can pay them off, the sooner you can quit worrying about them. Even better, your credit score will be affected positively.

There are other things you can do to take better control of your finances. If you still have creditors, you may want to ask them to lower the credit limits available to you. This can be done by writing a brief letter requesting that they lower your credit line. You can do this even if you are not carrying a balance with them. This will prevent you from using money that you do not have the capacity to pay back. Too many people have balances that they would never have reached had it not been available to them in the first place. You can take control of this part of your credit all by yourself.

Once you take the necessary steps to rebuild your credit after bankruptcy, be sure to check your credit report on a monthly basis or subscribe for credit monitoring. You not only want to catch errors that exist in the reports so that you can fix them. You also want to be sure that your good payments are reflected in the reports. When you do this, be sure to check your credit report from all three reporting agencies.

Going through bankruptcy is difficult as it affects your credit score for a very long time, if possible it should be avoided. With hard work and commitment, there is no doubt that you can steer clear from declaring bankruptcy.

by Sarah
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