Your personal credit score is a number between 350 and 900. That score is a rating system in which potential creditors, employers and insurers (just to name a few) decide what kind of person you have been- all based on your bill paying habits.
The myths and the madness behind the realities of bankruptcy and how it relates to your credit score can sometimes have more wrong information than the only hair-stylist in town. These inaccuracies and rumors can sometimes cause more panic and headaches than are necessary :
“My cousin’s neighbor’s sister filed for bankruptcy, and the feds liquidated her dog!”
Don’t start packing Fido’s personal effects just yet, as there’s a lot of information- cold, hard facts that you need to know regarding your credit and the all-important score that accompanies it before you give yourself a nervous breakdown.
First of all, filing for bankruptcy doesn’t “erase” your credit history. If you have negative reports from creditors on your report (from each of the three bureaus; Experian, Trans Union, and Equifax), those black marks will still be there long after your bankruptcy has been discharged by the court. Bankruptcy will simply take your reported balance from each creditor and change it to ZERO . You are basically stopping any additional negative marks to your credit and halting the downward spiraling credit score process. Your credit score drops in relationship to the number of creditors that you don’t have to pay, how many 30-day periods you were late on each, and how much money you avoided paying them.
Now comes the preparedness you’ll need to have. You will be asked to answer questions, such as “why did you file”, so be sure to have your answers ready. This is crucial in the process of rebuilding your credit score . Burying your head in the sand due to substantial humiliation isn’t going to help your situation.
Now that your credit score is basically at the lowest point possible, the good news is that your number can only rise from this point. The key to rebuilding your credit lies within two factors: Paying your bills and paying your bills on time.
But, in order for one to get bills to pay on time, you must have established credit. There are literally dozens of credit card companies out there, specializing in helping you get the credit you need to start rebuilding. Choices range within secured credit cards (tied directly to a savings account held in your name by the creditor) and unsecured (more like your average card.) Of course, the fees and interest rates for such creditors are significantly higher than those of traditional lenders, but you really don’t have a choice in the matter. The truth is, if you don’t begin the rebuilding process immediately after filing for bankruptcy protection, you may have just as well not filed at all- for your credit score will never improve.
