Rebuilding your credit score after bankruptcy in Wisconsin
Although bankruptcy does have an effect on creditworthiness, those who file can successfully rebuild their credit score using certain strategies.
Filing for consumer bankruptcy is often a viable solution for those in Wisconsin struggling with immense amounts of debt. Although this legal process can help debtors establish greater financial independence, those who file may be worried about how bankruptcy will impact their credit.
How bankruptcy affects credit
Credit scores are used by lenders so that they can quickly decide how risky it is to loan a person money, states The Huffington Post. These scores are often one of the primary factors lenders rely on while a person is applying for a mortgage or a car loan. Even though bankruptcy usually has an undesirable effect on a person’s credit report, this legal process’ impact often depends on the state of the person’s credit score before he or she filed.
For example, if a person files for bankruptcy with a credit score of 780, The Huffington Post states that his or her score may drop anywhere from 540 to 560 after the conclusion of the process. Comparatively, if a person begins the bankruptcy process with a credit score of 680, he or she should expect his or her score to drop anywhere from 150 to 180 points.
At the conclusion of the bankruptcy process, those who filed may be anxious to rebuild their credit. To do this, CBS News suggests that filers should:
- Obtain a copy of their credit report – those who recently filed for bankruptcy should acquire copies of their credit report from the three major credit reporting agencies, TransUnion, Equifax and Experian. Then, they should review them for errors.
- Submit an explanatory statement – former debtors can submit a statement to the major credit reporting agencies explaining their financial difficulties. Once this is done, the statement will remain on their credit report until a request for removal is completed.
- Establish a new source of credit – typically, after bankruptcy, the easiest way to get a new credit card is with a secured card.
- Use any new credit cards wisely – bankruptcy filers should only use credit to make purchases that they can pay off in full. These purchases should also be paid off before any interest starts to accrue.
Most importantly, those who file for bankruptcy should keep in mind that there is nothing they can do about their past credit history. However, they should also remember that only they are responsible for improving their creditworthiness.
Proper consideration is necessary before bankruptcy
Bankruptcy’s impact on credit is just one of the many effects associated with filing for this form of debt relief in Wisconsin. Those who are interested in filing for bankruptcy should meet with an attorney to discuss how this legal process will affect their personal financial situation.
Keywords: bankruptcy, Wisconsin, debt relief, credit score