Rebuilding Credit After Bankruptcy

There is a huge misconception among people in Michigan filing for bankruptcy. They have heard many untrue claims that they are likely to miss various benefits of the Michigan bankruptcy, which leads them to doubt whether they should file bankruptcy in the first place or not. One of the most common myths that many are misled by is that after filing for bankruptcy, you will no longer get your credit. 

Hammerschmidt Stickradt & Associates has been assisting clients suffering from insurmountable debts since 2001. We established a solid reputation in Royal Oak, Michigan by providing high-quality legal services. We assist clients who are confused about Bankruptcy and every other legal issue. We dedicate ourselves to provide the best legal advice possible.

There are numerous confusions behind bankruptcy because, regardless of how effective that legal remedy is, it cannot be denied that it has a complex process that ordinary people cannot understand. If you need help in understanding the nature of bankruptcy, calling an experienced and trusted bankruptcy attorney is the answer. 

To rebuild your credit, you should:

• Regularly check your credit report and make the necessary corrections if there are mistakes.
• Stick to your created budget
• Avoid any errors of the past

Bankruptcy is one of the most effective debt relief options. It provides people with a great opportunity to start over. You may be unsure whether your situation qualifies for this option; however, the assistance of an experienced bankruptcy attorney will help you understand and perceive your future situation. Receiving constant calls from creditors and the threat of legal action is a very frustrating experience. Let our bankruptcy attorney do the work for you.

What Is Credit Score and Why It Matters?

Many creditors now use your credit score to evaluate your credit history as disclosed in your credit reports and credit files. In this section, we’ll explain how credit reporting agencies and other creditors utilize information from your credit report to calculate your credit score. 

Credit scores are numerical data intended to enshrine the risk that you will default on your payments. To get the score, the company will gather data from your credit history, such as, the number of accounts you have, whether you were able to pay on time, collection activities against you, and among other things. These will then be compared to other analogous profiles and increase your credit points if they find you have a lower risk depending on your creditworthiness

There are hundreds of different credit scoring models available. FICO Score 8 and VantageScore 3.0 As a result, you will certainly have multiple credit scores simultaneously. Risk is determined separately and differently by scoring models, which can result in varying scores.

Who Uses Credit Scores?

Many companies check credit scores before granting credit. They also take into account interest rates and credit terms. Creditors use credit scores to determine whether to decrease or increase your credit, whether to renew your credit, whether to file for bankruptcy, and whether the outstanding amount is easily collectible.

The majority of mortgage lenders, as well as credit card companies, car dealers, and other insurance companies, rely on credit scores. Surprisingly, cell phone and utility companies use credit scores to figure out the required deposit. Your credit score can be considered not only to get a loan, but also to determine your credit terms and interest rate: if your credit score is low, your interest rate will be higher.

Every lender is able to choose to purchase credit scores from various companies that are selling different sorts of credit scores. This is one of their creditors rights. The average price ranges from 300-400 or 800-900, based on the type of score. There are some models that have existed for years already, while others are just starting. There are a few credit scores that are made for specific types of credit, such as credit cards, auto loans, and mortgages.

Building Positive Credit History

Through the process of eliminating debts, cutting expenses, making up for past due payments, or settling your unsecured debts, you are already working to rebuild your credit score. But if you are someone who is looking forward to other things which you can do to have your debts under your control, our experienced bankruptcy lawyer from Hammerschmidt Stickradt & Associates can help you. There are many other ways that you can employ to rebuild a great credit score and history, which include the steps you can take without having to apply for more credit.

Rebuilding Credit After Bankruptcy in Royal Oak, Michigan

If you have just filed a bankruptcy and want to get back on track, you might be thinking of jumping back into the credit market as early as now. But that is not the only way to get a fresh start. Below are the ten ways to develop and rebuild credit after bankruptcy without having to apply for loan debt in Royal Oak, Michigan:

• Make objections to outdated or inaccurate information in your credit report

You should wipe-out your credit report to get a greater credit score. This should be your first step. You have to dismiss every error to get a positive impact on your credit score.

• Include positive data in your credit report

You should include positive details that prove that you are financially stable, such as your job or address.

• Settle your credit card bills every month, if you are able

Paying your credit card debt will keep your credit utilization low. If your credit utilization ratio is low, you will have more credit points.

• Settle your bills on time

Whatever happens, it is always important to settle your bill payments on time. If otherwise, the collection agencies will be compelled to file a report with the credit reporting officer. Your credit repair will be negatively affected if this happens.

• Make strategies for the repayment of credit card debt

If you are unable to settle your debts in full, you can make a smart strategy for paying them down. Since credit scoring agencies will evaluate your debt ratio when determining your score, paying down your credit card bills with a higher utilization ratio will raise your score.

• Maintain low balances

Generally speaking, one should avoid using greater than a third of the available credit cards. If you exceed this, your credit score will be the first one to be affected.

• Utilize current credit cards prudently

If you are able to keep your gas card, department store, or credit card, always aspire to have your bills paid in full. 

• Get your own credit

If you are married, separated, or divorced, your credit accounts are likely to be in your spouse’s name. You should consider obtaining an account registered under your name.

• Increase the credit score limits on your current credit cards

If the unsecured debt amount you owe is almost hitting your credit limit, it will likely harm your credit score. To prevent this, you must increase your credit limits on your current credit cards. But, you must keep in mind that if you miss making payments, your score will go down.

If this happens, your credit card company might assume that you are in financial distress. This will somehow give them an impression that you are desperate to obtain credit scores. Thus, your credit card company will decrease the limit of your credit. So, showing that you are financially stable before requesting an increase is imperative.

• Don’t declare closure on old accounts

It is not a wise idea to close your old bank account. You might have considered this step a wise way to clean up your credit, but it is not. In credit card cases, it helps you to keep older credit card accounts for a longer time, which will give you a strongly developed credit history. If your old card charges annual fees, ask your credit card issuer to shift to another that doesn’t charge.

Call our Bankruptcy Attorney in Royal Oak, Michigan Now!

A bankruptcy petition is indeed one of the prudent legal remedies you can have for debt problems. To get out of debt, you must keep in mind that you have to sacrifice something. And this, for a time, could significantly impact your credit score. But life has a lot to offer. It is never too late to reorganize your credit. For every debtor, the process of rebuilding credit after bankruptcy in Royal Oak, Michigan is relatively simple. But, the terms used are undoubtedly confusing for a normal person.

With the assistance of a reputable bankruptcy law firm in Michigan, you will experience less stress, confusion, and more relief and convenience. With more than 20 years of experience helping people struggling with debt, Hammerschmidt Stickradt & Associates will assist you in rebuilding credit after bankruptcy in Royal Oak, Michigan. 

Other than rebuilding credit, we also help clients dealing with problems with Bankruptcy, automatic stay, abusive creditors, credit card debts, student loan debts, foreclosure, and wage garnishment, among others. If you need help, don’t hesitate to set up a free legal consultation today!