One reason people avoid filing for bankruptcy when they probably should do so is their fear of what will happen to their credit rating. By the time someone files for Chapter 7 or 13, however, their credit score usually has already taken a huge hit that will require a long time to rebuild. A lawyer such as Joseph I Wittman Attorney at Law can complete the paperwork and petition for bankruptcy, and also answer questions about how this decision affects credit ratings.
Rebuilding the Score
Credit scores are definitively tied to a person’s ability to borrow money and finance purchases. The idea of not being able to do this for the years that a bankruptcy remains on the person’s credit record is distressing to many people. Fortunately, it’s possible to start increasing the credit score number relatively soon after filing for bankruptcy with a lawyer like Joseph I Wittman Attorney at Law.
A Secured Loan to Rebuild Credit
One method is to obtain a secured loan from a financial institution that reports to credit bureaus. The person secures this loan with a deposit into a savings account. The loan might be $500, for instance, which the individual pays off over six or 12 months. Those on-time payments gradually result in the credit score moving upward. This process can be repeated once the loan is paid back.
Getting a New Credit Card
A few credit card companies offer credit to people with relatively low scores, charging higher interest as a protective measure. Once the person has obtained one of these cards, he or she should use it in a modest way, never going over 30 percent of the maximum allowed. It’s critical for payments to be made on time. Just one late payment can have a significant negative effect on the score that can last for many months.
The credit rating will probably be tough to budge upward for two or three years. However, even though the filing remains on the credit report for seven to 10 years, the score can still increase dramatically during that time. Visit the website of one particular lawyer to get started.
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