Rebuilding My Credit After Bankruptcy. Part 1

IF I FILE BANKRUPTCY CAN I REBUILD MY CREDIT? WILL I BE ABLE TO BUY A HOUSE?

Bankruptcy  cases show up on your credit report as a bad mark but it often cleans  up other bad marks. Also, it reduces your debt to income ratio. So there  is good and there is bad.

Credit  reports and scores are used to determine everything from getting a loan,  getting hired, and even to renting an apartment. We recommend that you  evaluate your credit. A bankruptcy is a powerful tool to wipe out debts  and begin a turnaround for financial freedom.

If  you can’t pay your debts in a reasonable time, your credit will not  improve because you will always be getting reported as late or unable to  pay.

Ultimately, deciding what to do  begins with getting your credit reports. You are entitled to a free  credit report once a year. Go to www.annualcreditreport.com.  Get a copy of each of the 3 major credit reports. Make sure you print  it or save it on your computer as you can’t get it free for another  year.

Or you can call each of the 3 credit report companies: Equifax, Experian, Trans Union. They can mail you copies of the reports.

The  credit report will allow you to see what is being reported by creditors  and what is on the public record (judgments, liens, etc.). If there are  errors you have a right to correct them. (As a side note when you come  to our office we help you get your free credit reports.)

Then get your credit score. Go to www.creditkarma.com.  It is free. Generally if you have a low score a bankruptcy discharge  will be the start of increasing it. Many of our former clients have  scores in the 700’s now.

After reviewing your credit reports and scores you are in better positions to weigh the Pros and Cons of filing a bankruptcy.

Can  you buy a home after filing a bankruptcy? It generally takes 2 years to  qualify for an FHA loan. FHA says it does not look at credit scores.  However, it looks for new bad credit, late payments and debt to income  rations. Other (non FHA) lenders generally require a score of at least  580 and some only 550.

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