Check Your Credit For Inaccuracies
You need to look for any inaccuracies that may be part of the bankruptcy entry. You will want to look very carefully for any mistake.
- Identity information
- Accounts that may belong to another person with the same or similar name
- Incorrect accounts that occurred from identity theft
- Closed accounts reported as open
- You are reported as an owner of an account but are only an authorized user
- Accounts incorrectly reported as late or delinquent
- Incorrect date opened, date of last payment, date of delinquency
- Same debt listed more than once
- Accounts that appear multiple time with different creditors listed
- Incorrect current balance
- Incorrect credit limit
There may be other inaccuracies you find as well the important part is to look closely and pay attention to detail.
If there are any inaccuracies, you simply dispute the bankruptcy entry with the credit bureaus, saying the information is incorrect and therefore should be removed.
Dispute via letter with the mistakes explained and make sure to send to each bureau. If there are no inaccuracies, move on to the next step.
Is Pay For Delete Illegal
The Fair Credit Reporting Act sets the rules for credit reporting as it applies to creditors, debt collectors, credit counseling organizations, and credit bureaus. The FCRA does not contain any language banning pay for delete, so its legal.
But before you get too excited, bear in mind that you can deploy pay for delete only on items that are incomplete or inaccurate. The FCRAs scope means you cant have accurate items removed from your credit report. If you try to use questionable techniques to remove accurate items, you may, in fact, be breaking the law.
Any pay for delete agreement you reach with a debt collector should be documented in writing in case you need to enforce the deal. Normally, you must first pay off the debt before the collector will remove the item, so a written agreement is required to ensure compliance.
Understand that without the agreement in place, the collector is under no obligation to remove items from your credit report, but theyre also not under any restriction to do so.
Adding New Positive Activity To Your Credit Profile
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Youve also correctly noted a couple of potential downsides to adding new credit hard inquiries and lower average account age.
Yet when focusing on the long run, your score is likely to benefit from the above-noted scoring pluses long after those inquiries stop counting in less than a year from now and as all of your existing credit accounts both good and bad continue to age.
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Curious About Your Bankruptcy Status
You can get a free copy of your current credit report once a year Ã¢â¬â be wary that checking too often can harm your credit score.
If you see a bankruptcy record that should not be there or any bankruptcy paperwork has a mistake, a bankruptcy attorney can give you an honest idea about how long the repair process will take.
The Two Types Of Bankruptcy
To begin with, its important to understand that there are two types of bankruptcy.
Chapter 7 bankruptcy is full liquidation of your assets and it does not involve filing a repayment plan. Instead assets are sold and the proceeds are used to cover the debts. It takes 10 years for this type of bankruptcy to come off your credit report.
Chapter 13 bankruptcy on the other hand allows individuals to develop a plan to repay some or all of their debts over the course of three to five years. The bankruptcy itself will automatically be deleted from your report seven years from its filing date.
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Review The Claim Results
Reporting agencies and lenders usually take around 30 days to investigate disputes. Once they make a decision, they must notify you within five days of completing their review. The notice will inform you if the disputed item was found to be inaccurate or not.
If the disputed information was, in fact, inaccurate, the bureau must update or delete the item. They should include a free copy of your file if the dispute results in a change.
If the bureau or lender considers the disputed information isn’t a mistake, you can file an additional claim. Review your initial claim for any errors and correct those. If possible, you should include additional documents to support your request as this can help the bureau evaluate any data it might have missed the first time around.
How Long Does Chapter 7 Bankruptcy Stay On My Credit Report
First, lets look at Chapter 7 bankruptcy and what it is. This is a liquidation bankruptcy designed to clear your debts so you can move forward with a clean slate. When you file for Chapter 7 bankruptcy, all debt collection grinds to a halt, including foreclosure, eviction, repossession, wage garnishment, and threats of lawsuits. The court appoints an individual to analyze your finances and assets, determining what can be sold to pay off creditors and what debts can be discharged.
Because this is such an extreme step to get out from under debt, its reserved for people under the states median income level or those who simply do not have the disposable income after essentials to pay off debt. This is also why it stays on the individuals credit report for 10 years, which is significantly longer than most other negative marks.
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Can I Have A Bankruptcy Removed From My Credit Report
Once you file for bankruptcy, you cant have it removed early from your credit report, and it is true that it will negatively impact your rating for several years. However, it will fall off completely after the allotted time span, and as you work to rebuild your credit and get back on your feet after bankruptcy, by the time it falls off, youll have a clean slate.
For many people, filing for bankruptcy after years of late and missed payments, high debt to income ratios, and credit cards near or exceeding maximum usage, filing for bankruptcy allows them to clear their credit sooner than if they were making minimum payments on their debts.
Get All Three Of Your Credit Reports
Your three credit reports from consumer reporting agencies Equifax, Experian and TransUnion are not identical.
The old debt in question might be listed in some credit reports but not others. To find out, get a copy of all three of your reports. Federal law entitles you to request a free copy of each report once every 12 months. You can download them for free at AnnualCreditReport.com.
Once you find out which bureaus are listing the debt, contact them. Your credit report will include contact information and dispute instructions. Equifax, Experian and TransUnion will give consumers free weekly credit reports until April 20, 2022.
Why this is important: If youre only looking at the copy of your credit report from one credit bureau, you may be missing inaccurate information that is on another report.
Who this affects most: Mistakes with credit reports can happen to anyone with old debt on any of your credit reports.
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How Can I Wipe Out A Bad Borrowing History
Some items will stay on your credit report for several years anyway:
- A bankruptcy will stay on your credit report, from the date of discharge, for six or seven years , depending on the credit bureau, the province you live in, and whether you were also previously bankrupt.
- A consumer proposal will stay on your credit report, from the date of discharge, for three years.
However, some lenders will consider giving you credit anyway, if you eliminate the other bad history and create some good history.
To eliminate bad borrowing history from your credit report as quickly as possible:
Can Chapter 7 Bankruptcy Be Removed From My Credit Report Before 10 Years
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In a Nutshell
Chapter 7 bankruptcy stays on your credit report for 10 years. Thereâs no way to remove a bankruptcy filing from your credit report early if the information is accurate. Bankruptcy will hurt your credit at first, but the effect will lessen over time. And in the long term, it can help you get your financial life back on track.
Even though Chapter 7 bankruptcy may be a good long-term solution to your financial problems, it can create issues in the short term. One issue is that it stays on your credit report for 10 years, which can make future lenders wary of giving you a loan. This might make you desperate to find a solution, such as reaching out to credit repair companies to see if they can help. To save you some time, so long as the bankruptcy is completely accurate, it canât be removed from your credit report.
Though Chapter 7 may hold you back temporarily, there are many ways to improve your credit following a bankruptcy filing. This article walks you through how bankruptcy works and how to improve your credit.
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Negative Credit Report Entries That Impact Your Score The Most
Most accurate negative items stay in your file for around seven years. Fortunately, their impact diminishes as time goes by, even if they are still listed on the report.
For example, a collection from a few years ago will carry less weight than a recent one especially if there arent any new negative items in your history. Improving your debt management after receiving a derogatory mark can show lenders you’re unlikely to repeat the issue and help increase your score.
These are the most common items that can lower your credit score:
Multiple hard inquiries
Multiple hard credit checks over a short amount of time are a red flag for lenders, as it tells them that you are applying for credit too often and, potentially, being denied.
However, there are some exceptions to this. For example, if youre looking to buy a home and want to compare interest rates between several lenders, you can. FICO and VantageScore, the two most commonly used credit scoring models, give consumers a window of around 14 to 45 to compare rates this is known as rate shopping. All credit inquiries done between this period of time will show up on your file as one item.
Foreclosure can also cause a credit score to drop substantially. According to FICO, a score can drop up to 100 points from a foreclosure, depending on the consumers starting score. Foreclosures stay on your record for seven years.
Send A Pay For Delete Offer To Your Creditor
You have to approach accurately reported negative information differently. Credit bureaus wont remove accurate, verifiable information even if you dispute it , so you may have to negotiate to have some items removed from your credit report.
Pay for delete offer is a technique you can use with delinquent, or past due, accounts. In pay for delete negotiation, you offer to pay the account in full in exchange for having the negative details removed from your credit report. Some creditors will take you up on the offer.
Will A Bankruptcy Ruin Your Credit Forever
No, a bankruptcy will not ruin your credit forever. When you first file for bankruptcy your credit score will take the biggest hit. As the bankruptcy ages, your credit score will improve so long as you responsibly borrow and make timely payments. Also, a bankruptcy only remains on your credit report for 10 years. After the 10 year period, the bankruptcy will be removed and your credit score will increase.
Accounts Included In The Bankruptcy
After youve filed for bankruptcy, the accounts included in your bankruptcy will show up as included in bankruptcy on your credit report. Most of them will remain on your credit report for seven years. These include accounts like charge offs, collections, repossessions, and judgments. They can also potentially be removed from your credit report before the reporting limit of seven years.
Ways To Rebuild Credit After Bankruptcy
Regardless of the type of accounts you open, be sure to make every payment on time. With credit cards its also important to pay your balance in full monthly and keep a low debt-to-limit ratio on the accounts.
Dispute Inaccurate Items Yourself
You can embark on DIY credit repair by ordering your three credit reports from AnnualCreditReport.com, a source of free credit reports authorized by the federal government. You need all three reports because creditors may report transactions to only one or two credit bureaus.
After receiving the reports, review the four sections for errors:
- Identification: Information identifying yourself, including your address, date of birth, and Social Security number. Incorrect information may be a tip-off that the report covers accounts that dont belong to you.
- Tradelines: This contains your account data, which includes your use of credit and your borrowing activity. The data includes account balances, payment history, and a collection account or charge-off.
- Public records: Court information regarding adverse legal judgments, bankruptcies, liens, foreclosures, vehicle repos, and money owed for child support.
- Inquiries: Hard inquiries are those you authorize a credit provider to make when you apply for a credit card or loan. These can lower your credit score. Unauthorized soft inquiries have no impact on your score.
The hardest part of DIY credit repair is combing through your report data for accounts or account activity you dont recognize, incorrectly reported negative credit file items , and liens and judgments you have already paid. You also should check for hard inquiries you didnt authorize.
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How Do I Remove Negative Items From My Credit Report
To recap the material already presented, you have several ways to legally remove negative credit report items:
- Dispute erroneous items on your credit reports by doing the work yourself.
- Hire a credit repair service to dispute inaccurate items on your behalf.
- Send a goodwill request.
- Send a pay for removal request.
- Wait for items to age off your reports.
The last item, waiting for bad items to age away, is the easiest method, as you dont have to lift a finger for it to work. The downside is that it may take several years to bear fruit.
You can initiate credit repair yourself without the expense, although youll have to devote some time to the process. Alternatively, you can pay credit repair companies to do the job for you.
are better positioned, have superior knowledge, and can usually complete the job for under $1,000, sometimes considerably less.
Filing Bankruptcy Is Not The End Of The World
While bankruptcies may be a somewhat unpopular topic or continue to carry a stigma socially, there can be a silver lining to going down this road.
From credit perspective, its a master reset on your credit, you are starting from scratch, said Exantus. And Ive personally seen people who have filed for bankruptcy and in a couple of years their scores are in the high 700 or 800 range because they have established better financial habits.
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This article has been updated. This article was originally published April 18, 2013.
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