Articles Posted in Credit Score – Repair and Rebuild

Credit Score – Repair and Rebuild. This is not only a very important topic but a widely misunderstood one in regards to how bankruptcy affects your score and how to rebuild and repair your credit score after filing.  There is so much misinformation out there and flat out lies it is unreal. In this category of our blog, we will answer many questions about your credit score and how it is impacted by bankruptcy.  Yes there is an initially negative impact to your score – anywhere from 30-50 points.  BUT – you can rebuild that score within 12-18 months. Usually if you are considering bankruptcy, your credit score has already been taking hits due to late payments, maxed out credit cards, pending foreclosure, lawsuits, debt collector reporting, etc.  If you know you are headed down the road of bankruptcy, the sooner you regain control, the better to your score. You are hit for each late payment, each credit card whose balance is over 30% of its limit, pending foreclosure action, repossession, debt collections – so if you catch your situation prior to these things happening for months – all hitting your score in a negative way – the hit from bankruptcy is not as bad. Think about it –  don’t get hit 5 times for the same debt issue because you’re trying to avoid the one thing that could help you recover – bankruptcy! Credit Score – Repair and Rebuild it quickly, regardless of where it is at when you file bankruptcy.  Check out these articles and see how to regain control over your credit score.

building-credit-300x177Managing your money: Step one to building credit. It may seem like a step backwards, but before you can build and/or rebuild your credit, you must first make sure you have laid a solid financial foundation based on proper management of your money. You must be able to manage what you have before you can increase and expect what you are building to stand.

So let’s take a moment and talk about managing your money. In order to begin managing your money, you must first know exactly how much you have now and will have on an ongoing basis (your income). Then you must know how much you spend (your expenses). Start with the money you earn. What is your Gross (before taxes & deductions) income?  Review your deductions – are you paying enough tax, too little tax? Are your other deductions in line with what you need? Are you carving out at least a minimum of savings for retirement? Now let’s take a look at your Net (take home) income.  Be sure you are looking at this amount as a “monthly” number. Next, list out all your expenses that must be paid from that Net income. House/Rent, food, gas, lights, etc. Everything. Trips to the candy store. All of it. You can look at your bank statements or receipts to get an idea of what the average costs are and to be sure you haven’t missed anything.  The most common issue people have when they get into financial trouble is that they do not know their numbers. Maybe round about – but money spent without a plan is usually much more than you would spend with a plan. 
Once you have both numbers – total income and total expenses – subtract your expenses from your income. Do you have money left? Are you breaking even or are you in the hole?  Now that you have an answer – it’s time to start making management decisions about your money. If your expenses are already at a minimum, what can you do to earn more? If your income cannot be changed, what can you do to spend less? 

The FDIC frequently hears from bank customers who have been or think they were the victims of theft or fraud. The FDIC Consumer News highlighted 10 scams that specifically target bank customers and provided some basic instruction on how to protect your money and personal information in the article I have linked to below.  Be sure to click on “10 schemes”.

The topics included:

  • 10 schemes bank customers should watch out for, beginning with the crime that occurs when thieves pose as government employees with false claims about needing a payment or valuable information, such as Social Security or bank account numbers;


Are you being haunted by a low credit score? We know how our credit score is a huge part of our financial picture. Having bad credit can cost you money (not qualifying for a particular job) and missed opportunities (paying higher interest rates, higher insurance premiums, and not being able to qualify for loans).  If your credit score has become something that sabotages your financial goals at every turn, fear not. It doesn’t take magic to bring your credit score back to life: just some good old fashioned time and effort that involves clean up of what’s out there and careful movement going forward.

The first thing you should do

Take a good, honest look at your monthly budget. Are your debts far outweighing your income? Can you pay off your debt within a reasonable amount of time without stress, anxiety, lack of sleep, lack of necessities due to working more than 1 job? Before you worry about bringing that credit score up, get your budget into a workable position. If you work on your credit but your income can’t sustain your debt level, you won’t get very far.  We offer free consultations regarding the options that bankruptcy brings to the table.  Bankruptcy can clean the slate and help you to rebuild so much faster.  Typically your score takes a 30-50 point hit when you file, but the clean up and rebuild is so much faster.  You can recover that and build in 12-18 months rather than killing yourself for up to seven years trying to out live the negative items reported.  If your income to debt ratio is under control, then dive right in and get that credit score up!

Before you accept a new credit card, there are a few things you need to know and to consider:

  1. Don’t accept too many – Be selective about the cards you choose and don’t have too many at one time. There is rarely a good reason to have more than one or two.
  2. Beware the Subprime – Sometimes lenders will offer you subprime cards instead of turning you down for bad credit. Generally these subprime cards have high interest rates, expensive fees, and low limits. Avoid those that “help” bad credit (take for instance the cards offered on Bad Credit Offers site) because these can often make your credit worse than it was to start with.   Use a trusted source like Consumer Reports to compare credit card offers.  There are also lenders that offer you a new card, but add the old debt to the new account.  If you have filed bankruptcy and wiped out credit card debt, this action would be a violation of your discharge and you should notify your bankruptcy attorney right away.

As part of the Federal Fair and Accurate Credit Transactions (FACT) Act, every Mississippi Resident is eligible to receive one free Personal Credit Report every 12 months from each of the nationwide credit reporting companies. To learn more, please visit the FACT Act Central Site located at:  Any other web site offering you free credit reports is a scam.  There are no free credit reports available other than on this site.

To order your free credit reports chose one of the following methods, Internet, Mail or Telephone:
1.    Go to the internet site at and order or print online.
2.    Print out the Annual Credit Report Request Form and mail it to:
Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
3.    Call 1-877-322-8228 and order by phone.

Be very careful that you DO NOT agree to arbitration if you order the reports online.

Do not contact the three nationwide consumer reporting companies individually for your free annual reports. They provide free annual credit reports only through the above web site, the above telephone number, or by mail.

Note- if you have been turned down for credit in the past 60 days, then you are entitled to get a free report directly from each of the three nationwide credit bureaus each time you are denied credit.  In addition, you may also order a report  from them at anytime and if you pay their credit report fee, usually around thirty dollars. Continue Reading ›

fix credit reportMost of us know about the 3 main credit report bureaus – Experian, Transunion, and Equifax …but have you seen ALL your credit reports? Did you know that more exist and are referred to as specialty credit reports? There are many other credit reporting agencies that report nationwide in specialty areas of credit. They are all required to make it easy for you to obtain a copy of any file they have compiled on you – or at a minimum provide a toll-free number that you can call and request your copy.   Not all of them, however, are required to provide a free report.

What is a nationwide specialty credit reporting company?   They collect information on consumers’ medical records or payments, rental or residential history, checking account history, claims made on insurance policies, and/or regarding your employment history.  They are just like the 3 main credit bureaus I listed above except that they gather information about you for potential landlords, certain creditors, companies reviewing your information for potential employment, insurance agencies, etc.

The CFPB (Consumer Financial Protection Bureau) has created a document available here that provides the information to you on all of these agencies and has broken them down into the following groups:

  • National Credit Reporting Companies
  • Check Screening/Check History
  • Payday Lending
  • Auto & Property Insurance History
  • Alternative or Supplementary Credit Reports
  • Utilities
  • Gaming
  • Rental
  • Medical
  • Employment History

Continue Reading ›

How does consumer credit counseling work? And more importantly, is there “a catch”? Consumer credit counseling can work great for someone who is just a little over extended in debt.  Consumer credit counseling agencies are the true non-profit agencies you hear about that work with your credit card companies to reduce your payments or interest rates so you can pay the debt off and be done with it.  However, this is limited to credit card debt.

How does it work?  The agency contacts the credit card companies, which will cooperate  to possibly reduce the interest rate.  The agency will then tell you the monthly payment that you must send in to pay the debt in full.  Your household budget and your ability to pay have nothing to do with the monthly payment amount.  You pay that monthly payment to the credit counseling agency and then the agency sends payments to each of your credit card creditors each month. The credit counseling agency will usually receive a fee for this service from the credit card company.

What is the catch?  Well, by the time you realize that you are in a financial bind, you are beyond the help a consumer credit counseling agency can offer.  The monthly payment you will make to the agency is not much different than the minimum payments you were making to pay the credit cards.  If your main issue stems from the lack of cash flow, which is extremely common, then consumer credit counseling doesn’t work.

How does bankruptcy affect my credit? Bankruptcy has a negative impact on your credit, but it’s the road to credit recovery, not a death sentence to your credit.  Think for a moment – if you are already behind on payments and debts – your credit couldn’t get much worse than it is now.  Bankruptcy improves your credit by getting rid of all the debt that is keeping you down.  Your debt to income ratio is hurting you as much as the late payments and no payments.  Most people will find their credit will recover within 1 year of filing a Chapter 7 bankruptcy.  Believe it or not, you’ll get credit card offers flooding your mailbox right after you file bankruptcy.  You could also go out and buy a car right after you file bankruptcy, but you wouldn’t be happy with the interest rate they put on the loan.

Bankruptcy doesn’t affect your ability to get credit as much as it affects the cost of your credit.  I have a credit instruction package I give to my clients that gives step by step directions for getting your credit score where it should be, where you can qualify for the better interest rates. So if you’re wondering “Will I ever get credit again?”, YES, you can have good credit again and a lot sooner than you think.

Whether you are doing a debt consolidation, debt management, debt settlement, credit counseling, or bankruptcy, all negatively affect your credit.  The secret they don’t want you to know: your credit will suffer if you are not paying creditors exactly like you agreed or exactly like they want.  Debt consolidation, debt management, debt settlement, and credit counseling companies want you to pay them a fee in addition to what you pay on your debts.  These payments are NOT improving your credit and in many cases the payment won’t cover the interest on the debt.

Bankruptcy can get you back on track to good credit faster and cheaper than any of the other options.  Don’t sacrifice your financial future by using your savings or cashing out 401k’s and retirement accounts in an effort to stay afloat.  Right now, you need to do what is best for you and your family.  Things aren’t like they used to be.  Your credit will recover after bankruptcy.

credit bureausThe bankruptcy code does not require that you reaffirm, or sign an agreement to continue to be personally responsible for the payments on your mortgage. As long as you continue to pay the house notes they cannot foreclose.  However, most mortgage companies will not report your payments to the credit bureaus if you did not sign a reaffirmation agreement. So it is important to know that it is still possible to get your payments included on your credit reports.

  1. Request a payment history from your mortgage company. (The mortgage company is required by law to provide one every year free of charge.)
  2. Send a letter to the three credit bureaus – TransUnion, Equifax, and Experian,  and dispute the fact that your mortgage payments do not show up or that you have not paid your mortgage payments and attach a copy of the payment history you obtained from the mortgage company.
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