After filing bankruptcy most people will tell you that you should start rebuilding your credit score, also known as a FICO score. But after filing your credit report might not be showing any active accounts anymore. The bankruptcy effectively zeroed everything out including, most likely, your car loan and mortgage. So with that taken place, how are you supposed to rebuild your credit? Well, there are a couple ways. First, start by getting a free copy of your credit report in order to discover what is actually on it.
Everyone is entitled to a free credit report from each of the major bureaus once a year. To start rebuilding your credit score you need to know what your credit report looks like now. To get a free credit report you can go here: https://www.annualcreditreport.com/index.action
This is one of the only true places to get a free credit report. It was set up by the Federal government. If you chose to go to a different website to get a free credit report and you have to enter your credit card information, that is not a free credit report and you should not proceed further!
Like I said above, you can get a free credit report from each of the three bureaus once a year. A better way to do this though, rather than getting all three once a year is to get a free report every four months. You can go to the above website every four months to order a report from just one credit bureau. This is a better way to check in on your report and score more frequently, rather than just once a year. This will keep you best informed of what your credit report looks like and how it’s changing throughout the year.
For example:
January: Go to Annual Credit Report and order your TransUnion credit report.
May: Go to Annual Credit Report and order your Equifax credit report.
September: Go to Annual Credit Report and order your Experian credit report.
Another option that is popular to getting your free credit report is the mobile app Credit Karma https://www.creditkarma.com/
Credit Karma is also free and provides you your three credit reports from the bureaus. Credit Karma is nice because you can log in, whenever or wherever to see your credit report. Credit Karma updates your credit score and report as it is updated from the credit bureaus so you can get a real time look at your credit score whenever, not just once a year or three times a year.
One of the questions I always get is what will my credit score be after bankruptcy. And I never have a sure answer. This is because it varies for everyone. On average you can except your credit score to drop about 150 points when you file bankruptcy. That means if you have a pretty good credit score while you file bankruptcy, say 710, your credit score will probably now be around 550. If you had a bad credit score when you chose to file bankruptcy (like most people, delinquent accounts, judgments) than your credit score can’t fall too much more and is probably also around 500.
At the time of your bankruptcy discharge your credit score will jump up. Yes first it will fall with the bankruptcy filing, but three months later (after filing a chapter 7) it will already start to rise. This is because you won’t have the debt load, judgments or delinquent account that was previously showing up on your credit report. Your debt load is now $0 which makes banks more likely to lend to you than when you were carrying a high debt load before the bankruptcy.
Did you know you can self-report your on time monthly bills to improve your credit score? This is an alternative to the traditional three credit bureaus that get its data from large lenders that you have borrowed money from and paid back. This is driven by you. It is a free alternative to building your credit that puts you in control of what is reported. You can report on time bills that traditionally go unreported, such as utilities or rent. You choose what bills you want reported and after you have set up your accounts, your report will generate every month. You need to make sure that if you choose to report bills such as utilities or rent that you make your payments on time. Just as this service will report on time payments, it will also report late payments.
One free service is: https://www.prbc.com/home
Another option is to see if your landlord uses a service that can report your monthly rent to one of the three big credit bureaus. Many times if you pay your rent through an online payment portal with your landlord that payment can be reported and that can benefit your credit score if paid on time. Check with your landlord or building manager to see if this is an available option for you. More and more landlords are choosing to do this because while you get to report this payment on your credit report, landlords get an easy way of processing payments online. More information from Experian is found here: http://www.experian.com/rentbureau/rental-payment.html
Sometimes I have clients you email or call me after a bankruptcy because something is still showing up incorrectly on their credit report. At the time of your bankruptcy discharge, all of your accounts should be noted as “closed”, or “chapter 7/13 bankruptcy” or “discharged”, or language that is similar, to show the account is closed due to bankruptcy and the debt has been zeroed out on the account. If after your discharge you still see an account open with a balance or showing as delinquent and the account is continuing to show missed payments you will need to correct your report. There are a couple ways of doing this.
Giving a call to the account holder, example your Chase credit card is reporting incorrectly. Call Chase and make sure they have the bankruptcy noted on your account. Tell Chase which credit report is showing incorrectly. Whether it be Experian, TransUnion or Equifax or all three reporting incorrectly.
You will need to send in a report or letter to each credit bureau that is reporting incorrect information. You can either do this by mail or online. Remember disputing with one credit report is not enough, if all three credit bureaus are reporting incorrectly, you must fill out a dispute with all three credit bureaus.
To fill out a dispute with Experian, you can start the process online here:
http://www.experian.com/disputes/main.html
To fill out a dispute with TransUnion, you can start the process online here:
https://www.transunion.com/credit-disputes/dispute-your-credit
To fill out a dispute with Equifax, you can start the process online here:
https://experian.referral.equifax.com/CreditInvestigation/home.action
More information and sample letters can be found here:
https://www.consumer.ftc.gov/articles/0151-disputing-errors-credit-reports
The best thing to remember with all of this is patience. It will take time to rebuild your credit score, and yes a bankruptcy is going to appear on your credit report for 10 years. But there are ways to actively try to improve your score.
Got Questions? Need Help? Kain & Scott has got you covered! Call now or send us an email to info@kainscott.com and we will gladly assist you!
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