What You Need To Know About Credit After Bankruptcy

What You Need To Know About Credit After Bankruptcy

If the public opinion surveys reported by the media over the past few years are to be believed, Mr and Mrs American Consumer would not even pretend to know much more about the after effects of debt relief beyond the abysmal fate of credit after bankruptcy declaration, and even that could be disputed to some degree. Successfully filing either a Chapter Seven or Chapter Thirteen bankruptcy will significantly limit your credit options, it's true, but credit after bankruptcy isn't the permanent black mark some debt counseling agents would have you believe.

The gold standard of credit scores remains the FICO model designed by the Fair Isaac Corporation a Minnesota firm with satellite offices in over sixty nations and a spotless record of service analyzing consumer finance projections for banks across the globe and the FICO algorithms are utilized by most every lending institution of importance during the process of approving or rejecting petitions for loans. Slight alterations are continually made in accordance with the borrowing habits of the American consumer so that the equations better reflect the debtor's status in relation to the current trends rather than set against an impossibly high ideal of repayment fidelity. Nevertheless, the essential FICO formula has remained largely unchanged for more than twenty years, and reducing figures for credit after bankruptcy has always been one of the most misunderstood variables.

Although the notation of bankruptcy shall continue to appear on your credit report for up to a decade following the date of the court ruling depending upon local regulations regarding shared public information for your state the major lending institutions essentially forgive and forget. Even mortgage loan underwriters, who traditionally employ the most harsh eligibility requirements (along with the lowest interest rates), won't penalize a home loan applicant for a bankruptcy more than four years past discharge. What's more, the unsecured lenders shall line up to offer credit after bankruptcy discharge for precisely the reason that borrowers trailing a Chapter Seven or Chapter Thirteen cannot so easily run away from their debts again for almost a decade.

As a matter of fact, prospective home owners that possess an excellent work history and low debt to income ratio may even qualify for a mortgage loan the very day they receive the letter from the trustee releasing them from the Chapter Seven or Chapter Thirteen program. In a odd economic twist, credit after bankruptcy credit scores, at least may improve dramatically simply because the (only vaguely defined, still) algorithms place a great deal of weight upon the levels of unsecured revolving debt, and, since credit card balances would be automatically eliminated, many borrowers are pleasantly surprised to request copies of their reports from the three agencies and discover that their credit after bankruptcy boasts the best scores they've seen in recent memory.

For borrowers who've avoided bankruptcy and instead employed a Consumer Credit Counseling company for assistance with their schedule of repayment or, worse, merely ignored all previous attempts at collection there's little purpose in even filling out a credit card application since any reputable company would summarily dismiss the claim after a glance at the applicant's credit report. If the lenders have access to a consumer's social security number and the written or verbal authorization to run a consumer's credit, they will pull a report for even the most dubious of claims, and that will further depress the numbers. Sadly, the majority of the consumers who learn too late that their credit ratings have been tracked without their knowledge only find out about the bad news because events have suddenly forced them to try and borrow funds. Decent credit after bankruptcy is entirely possible for most consumers, but restoring the scores shall still require a good deal of cultivation

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