Rebuilding your credit
You can start rebuilding your credit as soon as you receive a bankruptcy discharge. The law neither prohibits lenders from giving you credit after bankruptcy nor does it require them to do so. All the law says is that, if a credit bureau chooses to keep the information about your bankruptcy (and they always do), it can only do so for up to 10 years. What to do with that information is up to lenders. If a bank’s policy is that they don’t want to do business with people who filed bankruptcy, that’s OK. If a mortgage company is willing to finance your home in spite of your bankruptcy, that’s fine, too.
In reality, bankruptcy does make it harder, but not impossible, for you to get credit. Many people have bought homes and cars and got credit cards after bankruptcy. You may have to make a larger down payment, pay higher interest, or get a cosigner. If you want to buy a house, many mortgage companies ask you to wait a year or two after you receive your bankruptcy discharge before they consider your loan application. Many car dealers will not help you with the financing of a vehicle until you receive your discharge.
Some services claim that they can “repair” your credit. They make claims like “Credit problems? No problem!” “We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!” “We can erase your bad credit — 100% guaranteed.” “Create a new credit identity — legally.” The Federal Trade Commission (FTC) warns that “they’re very likely signs of a scam. . . . The fact is there’s no quick fix for creditworthiness.”
The best way to “repair” your credit is time and a good payment history: the farther away you are from a negative incident such as bankruptcy filing and the more accounts you have in good standing, the better your credit rating will be.
Reporting credit report errors
Under the federal Fair Credit Reporting Act, both the credit bureau and the information provider (that is, the person, company, or organization that provides information about you to a consumer reporting agency) are responsible for correcting inaccurate or incomplete information in your credit report. If you find a mistake in your credit report, you can dispute it in writing with the credit bureau and the information provider. Provide them with proof of your position. Both the credit bureau and the information provider are required by law to investigate your claim and, if you are correct, to correct the error. The information provider also must notify all three nationwide credit bureaus so they can correct the information in your file.
You can request a credit bureau to show that a particular account was included in bankruptcy. Keep in mind that a credit bureau is not required to remove accurate information.
For more information, visit http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre21.shtm.
Avoiding future problems
The 2005 amendment to the Bankruptcy Code require all individual debtors to receive debtor education, or a “personal financial management course,” before they receive a discharge. The course helps people improve their budgeting skills and stay out of future financial trouble.
