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How to rebuild your credit score after bankruptcy

Unmanageable debt is a terrible burden across the United States. While the number of bankruptcies filed each year is decreasing, Tennessee is still among the states with the highest level of bankruptcies annually. In some situations, bankruptcy is a good choice to regain control of finances, even if the process damages your credit score. The good news is that you can rebuild your credit, and that after a bankruptcy, you will have the ability to take control of and manage your finances responsibly.

Your credit score is the number that reflects the information collected in your credit report. The credit report is a summary of all of your debts. The factors that affect the score include the balances that you carry on credit cards or other open-ended lines of credit, your payment history and a summary of your recent requests for credit. You are entitled to one free copy of your credit report from each of the three major reporting agencies (Experian, TransUnion, and Equifax) each year. This brings us to the first step in rebuilding your credit following a bankruptcy.

Steps to rebuilding credit

First, obtain copies of your credit report to check it for accuracy. Make sure that any debts that were included in your bankruptcy are marked correctly. Make sure that every loan, credit card and line of credit that appears on your credit report actually belongs to you. Mistakes can happen and you have the right under the Fair Credit Reporting Act to dispute errors on your credit report.

The next step is to pay any remaining debts on time. This means everything: phone bills, utilities and any credit cards or loans that were left open following the bankruptcy. This demonstrates that you are managing your finances.

Another step towards repairing your credit score is to cautiously apply for new credit. Initially you may be subject to higher interest rates, but over time and with proper management, your credit score will improve and you will become eligible for lower rates. While a bankruptcy can stay on your credit report for up to 10 years, some banks will approve applications for secured credit cards. These cards will use your savings account as collateral against any debt incurred on the card or may require a security deposit. Two to three years after your bankruptcy is discharged, you can look into adding a loan to your recovering credit. You will likely be able to get approval for a car loan and some agencies such as the Federal Housing Administration or the Department of Veterans Affairs have programs to help people acquire home loans. Remember, do not over borrow. These loans are your tools to rebuild your credit by paying the full amount due, or more, on time, every time.

Do not be afraid to ask for advice. Rebuilding your credit can take time, but it is not impossible. If you are having financial difficulties and have questions about debt relief options, contact Mark T. Young and Associates at 423-933-1606. We will discuss the options available based and help you determine the best fit based on your situation.

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Mark T. Young & Associates
2895 Northpoint Blvd.
Hixson, TN 37343

Toll Free: 888-376-0282
Phone: 423-933-1606
Fax: 423-877-0363
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