How San Antonio Residents Can Improve Their Credit

by San Antonio Attorney

Many people fear that they will never be able to rebuild their credit worthiness after bankruptcy, but this is possible and surprisingly quick. There are several reasons for this. Firstly, the aim of bankruptcy, particularly when it is related to consumer debt, is to free the debtor to start life anew. Therefore, it does not make sense to deny the individual the chance to reestablish creditworthiness. Secondly, having received a discharge of consumer debt, the aim of chapter 7 bankruptcy, the individual is usually debt free and now has the chance to resume normal life. To some credit agencies, this means the individual is a reasonable risk despite the bankruptcy. Thirdly, some people are burdened with debt unexpectedly and dramatically despite a careful financial management history due to sudden changes brought on by such things as medical emergencies. Under these circumstances it is relatively easy to rebuild a favorable credit record.

One thing to be aware of is that bankruptcy may take as long as ten years to disappear from your credit report after filing chapter 7, and for chapter 13, it could be as little as seven or extend to as much as thirteen years. Although this will deter some credit card companies from offering their services, others will be willing to make a secured credit card available after bankruptcy. A secured credit card is rather like a debt card as it is necessary to deposit the same amount of money as available in credit with the bank issuing the card. This is one way to start again with credit.

The speed with which creditworthiness is reestablished has a lot to do with how the individual proceeds after discharge. Discharge clears the debt burden, so that the opportunity is there to establish a positive relationship with a credit card company. This can be done through always paying the credit card bill on time. One late payment will have a negative impact and more will be significantly detrimental. However, sound management has a significant positive impact as your current creditworthiness contributes approximately a third of the points to your credit score. Although, initially, it may be necessary to begin with a secured credit card and even a higher interest rate than usual, this can be converted to unsecured credit and a more modest interest rate over time. Judicious use of the credit card could see this conversion take place within two years.

It is also possible to get a home loan with a federal guarantee surprisingly quick if it you are able to show that you have taken a sound approach to managing your finances. This guarantee can be obtained after two years or as little as one year under extenuating circumstances, such as those described above related to unexpected medical expenses or similar catastrophes. With the federal guarantee, you will find it easy to obtain a home loan as the lender’s money is secure.

The chance to begin again and establish a sound credit record means it is possible to eventually eclipse the bankruptcy even if it is still on your credit report.

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