Bankruptcy Damages Can be Mitigated

Bankruptcy can be traumatic, and it can hurt your credit. But the damages can be mitigated significantly with credit repair. Do not imagine that you need to wait for years to have good credit again. Here is a simple series of steps that will allow you to recover from bankruptcy and to restore your credit scores. If you do it right you will be feeling good about your credit before you know it.

Reporting Modifications are Required

When an account is discharged in bankruptcy the creditors should modify the way it shows on your credit report. More often than not creditors will not make the required adjustments without prompting, necessitating some form of credit repair effort. Even in the case that a bankruptcy attorney sends a list of the discharged items to the credit bureaus it is not unusual for much of the clean up to be left undone.

Modifications Make a Big Difference

Reporting issues that should be addressed in your credit repair effort are simple but can make a significant improvement in the appearance of your report and the value of your scores. Past due balances should be reduced to zero, collection and charge off statuses should be eliminated, and the new simplified version of the account should show with the notation that the account was included in bankruptcy.

Continue Until Done

Persistence is called for, as the credit bureaus are known to do half of the work requested, leaving the rest undone. Credit repair often requires some redundancy of effort. You must examine the results of your request each time, leaving nothing to chance, until everything possible is reporting properly. A stray error can be costly.

Time for Rebuilding

Once your report is nice and tidy it is time to restore your credit scores by rebuilding. This is a critical part of the recovery process, and there are some technical credit repair facts to consider. The FICO scoring model puts extra weight on new accounts that are open after a period of bad credit. New accounts open now are worth twice the score value of accounts that have survived the bankruptcy.

Using Secured Cards

You can open new accounts now, regardless of the recent status of your bankruptcy. Secured credit cards are the perfect way to restore your credit. The best of these cards do not report as secured, report to all three major bureaus, have reasonable fee structures, and cost as little as 300 dollars to open. As they are secured, you will not get denied. Open two of these accounts and your scores will rise dramatically within 6 months of the initial reporting date.

Monitor Your Reports

Post-bankruptcy credit repair does require some vigilance. It may happen that some of the creditors reverse their correction, or that a new collector pop up for an account that was discharged. Of course they have no right to collect, but you must act quickly to protect your credit report. You might want to join a monitoring service that will notify you of any changes in your report. And if you receive a collection notice you must respond immediately with a copy of your discharge document.

Copyright © 2010 James W. Kemish. All Content. All Rights Reserved.