Fresh Start: Improve Your Credit Rating

Just because you have a credit card or are able to obtain a car loan due to your current debt to income ratio, don’t be fooled into be thinking that you have good credit. This may simply be a credit illusion. Another credit myth is that your credit is shot beyond repair once you have filed for bankruptcy. This is simply not the case. On the contrary, filing for bankruptcy in Tucson, Phoenix, Mesa, and Glendale, Arizona provides you with the opportunity to begin to build credit.

Through a few easy steps and planning, you should be able to quickly improve your credit score. Let our Arizona bankruptcy attorneys near Phoenix, Tempe, Chandler, Tucson and Glendale, AZ work with you on a plan to better your current financial situation. Contact our Phoenix, Mesa, or Tucson, Arizona Bankruptcy Lawyers. Through our free debt evaluation we can better analyze your current situation and deliver the best solution. Our honest and dependable bankruptcy lawyers at the Bornmann Law Group, PLLC will work with you on a financial plan that best suits your financial needs. Ideally, we will find a solution to your financial problems that discharges your debt and helps you keep the assets that are the most important to you.

Yes, it is true that filing for Chapter 7, Chapter 11, or Chapter 13 bankruptcy in Arizona will decrease your credit score. There is no one set amount that declaring bankruptcy will automatically decrease your credit score as it is different for every person. Those who had a high pre-bankruptcy score will take the biggest hit, while people who already had a low credit score will only have a small drop. You will face a larger drop in your credit score if there are a lot of your credit accounts included in your bankruptcy filing.

The Electronic Privacy Information Center estimates a typical drop of 160 to 220 points. The one thing that is for sure is that even though a regional Arizona bankruptcy filing has an initial negative effect on your credit score, your credit score is something that can be increased and re-established through careful planning over time.

A bankruptcy filing in Arizona can remain on your credit report for up to 10 years, depending on the chapter of bankruptcy that you file. For instance, a Chapter 11 and Chapter 7 bankruptcy filing will stay on your credit report for an entire decade. If you file a Chapter 13 bankruptcy and complete your trustee payments, a Chapter 13 bankruptcy can drop off of your credit report in seven years. Creditors will see your bankruptcy filing for that entire length of time, so it can continue to affect you. However, FICO states that your most recent history carries more weight than old information.

One of the ways that you can improve your credit score after bankruptcy is to make prompt payments on your post-bankruptcy accounts and use your credit lines carefully.

Shortly after filing for bankruptcy, any line of credit that you get will be at a high rate of interest. In as little as six months after filing your Phoenix, Tucson, Arizona bankruptcy, you may be able to qualify for a high-rate mortgage, however, if you can wait until you qualify for an FHA loan you will be better off in the long run. After a Phoenix, Tucson, Arizona bankruptcy filing, it usually takes only about two years after your case has closed before you are eligible for an FHA loan, that is providing you have maintained good credit habits since your bankruptcy filing.

There are many things that you can do to help rebuild your credit after bankruptcy. Auto loans can also be very helpful in rebuilding your credit after filing for a Phoenix, Tucson, Arizona bankruptcy. Just remember that even though your interest rates will likely be quite high after filing for Chapter 7 or Chapter 13 bankruptcy, there is hope. Once you have made timely payments for a year or so, you’ll usually be able to refinance into a lower rate.

If you would like help improving your credit rating or would like to explore your financial options contact us today. Our Arizona bankruptcy lawyers will advise you as to how to improve you credit score.

You can either visit one of our regional bankruptcy offices in Arizona for your FREE consultation or set up a FREE Phone Consultation with one of our helpful bankruptcy lawyers near Mesa, Glendale, Tempe, Phoenix, Tucson or Flagstaff, Arizona. Schedule you free consultation today by calling (480) 833-8000 or (520) 306-8729 or by filling out our online form.