Discharged Bankrupt? Improve Your Credit Rating – 4 Tips
After bankruptcy, its easy to think that you can do without any form of credit. However, the reality is different, and in time you may well need to borrow money or even open a bank account. The good news is that there are things you can do to improve your rating, rather than just wait for things to change.
Tip 1. Creditor’s Accounts.
It’s important that you understand how your credit score is compiled. It is not just a single agency that gives the rating, but data that the agency receives about your credit position from your creditors. This is analysed and your score worked out.
Make sure that your bankruptcy includes all your creditor’s accounts and that the balances show zero. The next step is to contact your old creditors and ask them if they would be prepared to stop reporting your account to the credit agencies. They are not obliged to report to the agencies, and if you can persuade only one or two to cease reporting, this can have an enormous positive impact on your credit score.
Tip 2. Your Credit Cards.
There is something of an irony here, in that it might well have been credit cards that caused the problem, and yet they can also perform a useful role in getting your credit rating higher. A credit card after bankruptcy, if you can get one, is a means of showing that you can borrow and repay debt responsibly, which is what the credit agencies are looking for.
Tip 3. Try a Secured Credit Card.
A secured credit card is an almost risk free way to restore your credit rating. Basically, you pay the credit limit up front, and it is held as a deposit. If you find that you cannot repay the balance you can hand the card in and clear the balance with the deposited amount, which will be cover what you owe.
The key is to use the card and always pay it off at the end of the month, so that the credit agencies can then see you repaying credit, and adjust your rating upwards. If you always used cash instead, this would have no bearing on your credit rating.
Just be certain that the card issuer is registered with the credit bureaux, otherwise the card will have no bearing on your credit score.
Tip 4. Get Included on a Friend’s Credit Card.
If you can persuade a relative or friend (with a good credit record) to add your name to their card, you will benefit from their history and this will improve your rating. The other person’s rating is not affected by your bankruptcy and you do not even have to use the card, it can be totally passive.
However, you will be affected by any lowering of the other person’s credit rating.
For many folk however, harsh financial events have come together to make repaying their debts impossible, and has left them considering how to claim bankruptcy. If you are in that situation and need more free advice, visit www.howtoclaimbankruptcy.net.
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