For many debtors neck-deep in debt, bankruptcy is often the only way out. Whether getting rid of debts or being relieved of harassing calls from debt collectors by filing for bankruptcy, the path of bankruptcy is littered with undesirable consequences such as 7-10 years of a bad credit record.
The good news is that with a little effort, entrepreneurs can improve their credit even before these negative records expire. Listed below are a few simple strategies smart business people can take to rebuild their credit and get back in business.
1. Identify existing credit status
This is the most important step to take toward rebuilding credit. Smart business people need to know the current state of their credit. This is secure and easy and can be done online by obtaining credit reports from the three national credit bureaus like Equifax, TransUnion and Experian. The next step is to get to work by printing out these reports and carefully reviewing them. Any mistakes found in the reports should be reported to the appropriate agency so that they can be rectified.
2. Verify expiration dates
A bad credit record will be on your credit report for 7-10 years by law. But the exact expiry date might not be the same in each of the reports of the national bureaus mentioned above. Even though old debts have been paid off or discharged through bankruptcy, some debtors still have their bad record in their credit reports. The best practice is to check the date of each of the bad debts, not leaving out charge-offs, late payments, judgments, liens or collection records. Doing this will help you understand precisely when these documents will expire.
3. File for rectification on any inaccurate records
If some records are not accurate, records of the expired credit report still exist or there are some fraudulent accounts, the next step is to send a separate letter disputing the precision of the reports. You may also request updates on the records of the three credit bureaus that will initiate a one-month investigation into the validity of the request. It is often unnecessary to make a fuss over any positive information listed in the credit reports. To try to do this is a waste of time, as this action may actually result in harming your credit scores.
4. Improve your credit score
The best way to improve your credit score is to add proper credit and start building it from there. It may not be possible to remove a bad record from the credit report, but it is advisable to open a new credit card from banks that have a credit card plan designed to help people rebuild their credit after bankruptcy.
At this point, it is essential to maintain the new credit card, using it responsibly and making timely monthly payments. Doing so will build a history of good credit behavior on your credit report. Over time, you will gain access to a loan which will boost your credit score even higher.
5. Get a monitoring service
Once your credit score has begun to improve, it is time to monitor progress. This can be done through credit monitoring software that tracks the progress of your credit score. Utilizing credit responsibly is vital, and by monitoring your credit closely, you will be able to see the new positive information that is added to your score.
Ultimately, being proactive to recovering and rebuilding your credit is essential after bankruptcy. By using all the strategies listed above, any individual will realize that bankruptcy does not have to chain them to bad credit for the next 7-10 years.