Recently, record numbers of individuals have filed for bankruptcy, or had homes that entered into foreclosure.  This problem is worsening exponentially, and has become a pandemic that has spread to virtually all parts of the country.  As an example, Long Island, New York experienced 2,154 bankruptcies in the first quarter of 2008 alone, according to the May 23, 2008 issue of Long Island Business News.    Foreclosures in Long Island were up 11% during the same quarter.  Being that these same trends are being seen all over the country, it stands to reason that there are now thousands of people out there with the damaged credit of a recent bankruptcy or foreclosure status.  While this can be disheartening to anyone, most credit situations are not nearly as terrible as they seem.  Credit is easy to repair if you take decisive steps and have patience.    The first step in repairing your credit after a bankruptcy or foreclosure is to get a copy of your credit report.  The report needs to be obtained from all three major credit bureaus.  www.freecreditreport.com is a website that was set up with the assistance of the federal government as a means for citizens to view and manage their credit files.  Legislation passed at the time allows for one free copy from each reporting agency, once a year.  When you have these reports in front of you, check them for errors of any type.  If you find mistakes, you will need to formally dispute the information with the credit agency reporting it, and have it removed from your file.  If you dispute a reporting that is deemed to be valid, you can still legally have a consumer addendum added to your report, which will allow you to leave a permanent statement in your file that can explain or clarify delinquencies or inaccuracies.      After your credit report has been checked for errors, you can begin the true repair process.  The most effective means of quickly improving your credit score is to “piggy-back.”  This is where you are added as an authorized user to the account of someone who already has well-established credit.  While you will have no real financial obligation for the account, you will gain the good payment history of the person whose account you are piggy-backing.  This can improve credit scores dramatically, and in a very short period of time.     Even with poor credit, there are many high-risk lenders out there that will approve you for a credit card at an 18% interest rate or higher.  Take it, and use it to your advantage. Use the credit card to pay for everything:  rent, groceries, utility bills, pet food, gas, and so on.  However, being that you would normally pay cash or write a check for those items, you can simply mail one large check to the credit card account, before it cycles into the next month.  If you do this, you will avoid paying any interest fees, have a large amount of purchasing power, and will be quickly building your credit as a desirable “pay-in-full” customer.  Furthermore, if you can get a credit card with purchasing benefits, like airline miles, you can get free perks just for spending money that you were going to spend anyway.   Many banks and credit unions will make secured or collateralized loans.  Take advantage of these, even if it means you have to “buy” one.  In many cases, you can hand your bank cash, and ask them to make you a loan based on using the cash as collateral.  Or you can put an automobile up as collateral.  In any case, these loans will report favorably to the credit bureaus, helping to improve your score.  Doing this at multiple banks will help immensely.     Once you have established some credit, even if it is of the secured kind, ensure that you pay for the credit according to terms.  Never miss a payment or pay late, and always pay more than the minimum amount due.  Bankruptcy or foreclosure is not the end of your credit situation.  In fact, in many cases, it is only the beginning.         –

This entry was posted on Monday, November 3rd, 2008 at 7:31 am and is filed under Long Island Bankruptcy, Repairing Credit. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.