Re-Establishing Credit

Re-establishing credit is an important part of post-bankruptcy life.

Here are a few things you can do:

  • Obtain a “secured” credit card, charging small amounts each month and repaying them on time – avoid carrying monthly balances.
  • Get a small personal loan from your local bank and deposit the proceeds into a savings account where you will set up an automatic payment debit for each month until you’ve fully repaid it, then get another.
  • Avoid applying for a large number of credit card offers as having too many inquiries on your credit report can lower your credit score.

Repair Your Credit

Bankruptcy is the first step in repairing your credit. Most of our clients had declining credit scores before bankruptcy, but now can start fresh. There are at least two good reasons for creditors to extend new credit to someone who has filed bankruptcy: 1) Creditors know that you can’t file bankruptcy again for quite a while, so they feel a bit safer; 2) Creditors are aware that those who have received a discharge are less burdened by debt and therefore are more likely to have money available to pay their debts.

What’s FCRA and FACTA?

FCRA is the federal Fair Credit Reporting Act and FACTA is the Fair and Accurate Credit Transactions Act. These acts have been around since December 1, 2004 to help protect you against inaccurate credit reports by guaranteeing your rights to:

  • Know what’s in your credit file
  • Find out the name and address of any credit bureau that produces a report that results in a denial of credit or employment and the right to obtain a copy of that report
  • Dispute inaccurate information with both the credit bureau and directly with the entity that provided the inaccurate information to the bureau-usually the creditor
  • Force the credit bureau to verify any information that you claim is wrong and to delete incorrect information when it can’t be verified within 45 days
  • Insist that corrected reports be sent to anyone who received an incorrect version within the past six months
  • Receive a free updated copy of your credit report within 45 days when an error has been corrected
  • Expunge adverse information after seven years (ten years after a bankruptcy)
  • Include a written statement in your credit file explaining any issues that you dispute

How to Obtain Your Credit Report after Bankruptcy

Clients of The Moak Law Firm get a post discharge credit report as part of the Due Diligence Products. The three main credit reporting companies are Equifax, TransUnion, and Experian. A few weeks after your bankruptcy discharge, you can order credit reports from them.

How to Get a Free Credit Report

You can get a free copy of your credit report when you:

  • Have been denied credit during the past 60 days because of that report
  • Are unemployed and intend to apply for work within the next 60 days because of that report
  • Receive welfare assistance
  • Believe that the report contains inaccurate information as a result of fraud

What to look for on your credit report

  • Mistakes unrelated to your bankruptcy
  • How your bankruptcy is reported

Make sure you look at the following

  • Misstated name, Social Security number, birth date, or marital status
  • Included information about someone with a name similar to yours
  • Contain obsolete information.
  • Accounts reported more than once
  • Any lawsuits you were not involved in
  • Included credit inquiries older than two years

Make sure your credit reports reflect your bankruptcy

All your pre-bankruptcy accounts should reflect a zero balance.

Obtain New Credit

Keep paying your home and car loans if you have them. New creditors like to see that.

Apply for an unsecured credit card

There are many lenders that target people with a recent bankruptcy. Remember your goal in getting a credit is to establish responsible credit.

Secured Credit Cards

You may not be able to get an unsecured credit card. If you need to get a secured credit card, try and make sure that the lender doesn’t flag your card as secured.

Make sure the credit bureau knows that you’re paying your bills

If you’re making your payments to a creditor that doesn’t report to the credit bureaus, you can still write the agencies yourself. They’re not obligated to comply, and they probably won’t, but asking is worthwhile. When you do, be sure to include the creditor’s phone number and your account number so that the credit bureaus can verify the information.

Watch out for Scams

There are many credit-repair companies out there. Be careful if they

  • Offer to lend money
  • Plan to sell your name to other lenders
  • Boast that they can remove truthful information from your credit report

Call 480-755-8000 to speak with our Arizona bankruptcy attorney today for immediate help.