The credit score

[SageMother]

I saw a piece on bankruptcy on CNN this morning and the talked about a fellow who has a credit score of 619 after having filed. One of the points made was that it takes about 3 years to get your score back to something decent after filing. For some people that will seem an eternity, but it does let you know that some of the things they say about having difficulty reestablishing might be a bit exagerrated.

[Calypso]

The attorney who helped me file for bankruptcy urged me to start rebuilding my credit right away by continuing to pay my car loans and student loans and getting ONE credit card, putting a small charge on it every month, and paying it off each billing cycle.

He, too, said that in about three years, my credit score would be decent again. Not good, but not hideous either. He said something to the effect of, "Creditors are going to care more about the car you paid off last week than the bankruptcy you filed three years ago."

Makes sense to me!

[randomthoughts1875]

This is all very interesting! What benefit is there in exagerrating the length of time to the consumers? I suppose it's just another tool that debt collectors have on their side.

[SageMother]

Quote:

Originally Posted by randomthoughts1875

This is all very interesting! What benefit is there in exagerrating the length of time to the consumers? I suppose it's just another tool that debt collectors have on their side.

I think it might be to maintain profit margins. Once you file bakruptcy the lenders can't keep adding interest, from what I understand, so they can't get the profit they were hoping for.

[moonmagick]

That is encouraging. I know 3 years sounds like a long time. But its a heck of a lot sooner than I expected. It makes it seem like maybe it wont be an eternity after all.

[Calypso]

Oddly enough, some creditors seek out people who have been through bankruptcy. Why? Because the creditor assumes that that person doesn't handle debt very well and may put high balances on the card, and because they know the person can't claim bankruptcy again for several more years, so they're likely to get paid.

Fool them. Pay off the balance every month. If you can avoid it, don't carry debt from one month to the next. I know it's tempting to use cards for those little extras we can't afford, but try to resist the impulse. My new motto (barring big purchases like cars, houses, emergency medical care, etc.) is that if I can't afford to pay for it in cash, I don't need it.

[mamab]

That sounds like a good motto, Calypso. Somewhere online I read an article that says that you should always "shop at home" first. That means, check around your house and make sure you don't already HAVE something before you go out get something.

[moonmagick]

That has been my motto too. For a while now. I figure if I don't have the cash for it, then I don't need it too badly.

[moonmagick]

I filed bankruptcy and it was discharged a little over 6 months ago. I pulled a credit report out of curiosity the other day, and I was very pleasantly surprised. My credit score has already creeped back up to the mid 600 range. There is a light at the end of the tunnel.

[nangel78]

I know of some who have had to file for bankruptcy. I know they recently redid the laws on it too.