This is a guest post from Daniel Stone, attorney at the Stone Law Firm, LLC in South Carolina, where he primarily handles consumer bankruptcy cases for individuals in Columbia and Lexington.
Here are 6 tips to increasing your credit score after you obtain your bankruptcy discharge:
1. Apply for 1 to 3 secured credit cards. I recommend getting a card that will allow you to put as high a deposit as possible. Why? The disposable balance the credit card will report to the credit bureaus will be the same as your deposit. So, if you put down a $3,000 deposit, your credit report will show that you have access to $3,000 and that will significantly pump up your score.
2. Once you get the secured credit cards, only use them for small items such as gas. Also, pay off the small balance each month. The initial credit increase I mentioned previously will go away if you start to carry a balance.
3. What are some good secured credit cards to use? I look for two things. First, I want a card that will allow me to put down the largest deposit I can. A card with only a $200 deposit will not help you as much as one where you can deposit $5,000. Amalgamated Bank of Chicago will allow as much as a $10,000 deposit. Capital One will allow $2,500-$5,000. Second, I want to make sure the credit card I use reports to all 3 major credit bureaus. The cards above report to all 3.
4. Monitor your credit report every six (6) months. Make sure all items that have been discharged in the bankruptcy are deleted. In addition, carefully monitor your report to make sure there are no other mistakes.
5. When disputing items on your credit report, I recommend doing it in writing rather than their on-line service. In my experience, letters have to be dealt with by a processor and they have to manually input the information, which helps your case. Make sure you provide: your name, social, address, date of birth, and each account you are disputing. I also recommend certified mail.
6. If you attempt to settle a debt on your report that is not discharged in bankruptcy, try your best to negotiate that the entire item be removed from your report in exchange for paying it in full or close to full payment. Settling a debt that still remains on your credit report usually does not help your score. In fact, sometimes it can even lower it. If it is removed, you should see a significant increase.
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