Debt Relief, Timothy Kingcade Posts

How to Avoid the Most Common Debt Consolidation Traps

The debt consolidation industry is filled with pitfalls for consumers. Many of these for-profit companies prey on those struggling with insurmountable debt. Debt consolidation refinances your debt and rolls multiple debts into a single, lower monthly payment. You can use either a personal loan or a credit card to consolidate the debt.

However, this option doesn’t come without risk. What you may not know is that some debt consolidation companies charge high interest rates to go along with the new monthly payment plans they set up for clients. It is important that consumers do their research through the Consumer Financial Protection Bureau (CFPB) to make sure the debt consolidation company is not a scam, as many do exist.

Some of the biggest pitfalls in debt consolidation occur when a consumer falls prey to one of the many scams out there. The Internet is full of scam artists who pretend to be online lenders offering deals that are simply too good to be true to people who are struggling financially. Many of these individuals have been turned down for credit and loans in the past, so they may jump at the chance when someone offers them the opportunity of a reduction in debt.  Debt consolidation is oftentimes a temporary fix to a bigger problem.

Before agreeing to any deal found online, the consumer needs to conduct a thorough background check on the company before going any further. If the company is asking for a large fee upfront or requires the person to make several months of payments before starting, these statements may raise some red flags that it is a scam. The Better Business Bureau is another good resource to see if the company has complaints filed against them.

Another mistake many consumers make is to apply for multiple loans at the same time in hopes that one will be approved. However, what they are not aware of is the fact that every loan application triggers a look into the person’s credit history. Every time a lender pulls someone’s credit history, this causes that person’s credit score to drop.

One helpful tip before making any decisions on a consolidation loan is to know where the consumer’s credit score stands before making any applications. That way the consumer can ask the lender what minimum credit score they require before applying.

Additionally, many consumers make the mistake of assuming that they do not need to keep making payments on their current credit cards while waiting for the debt consolidation process to finalize. Even if the consumer is approved for a balance transfer, he or she will still need to pay at least the minimum payments on the multiple credit cards since balance transfers can take a couple of weeks to process. Check the balance on each card even after the transfer goes through or loan payment is made to ensure that no balance is left on the card. If the card does still show a small balance, be sure to make payment by the due date to avoid a late fee and negative hit to your credit score.

Click here to read more on this story.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

 

Credit

Qualifying for a Home Mortgage with Bad Credit

A low credit score does not have to keep you from buying a home. Reviewing your credit score is a part of the mortgage approval process. What is considered “bad credit” when it comes to a mortgage or home loan? Ultimately, that designation can depend on the lender. Not all lenders have the same guidelines when it comes to determining what is bad credit. Many lenders specialize in working with clients who have a less than perfect credit rating.

For the most part, the base credit score to be approved for a regular home mortgage is 620. Some lenders will require the score to be higher, while others may permit a lower score. It helps to check your credit score before you contact a lender so that you are aware of where you stand on the credit spectrum. Most lenders will use FICO credit scores for determining whether to approve a home mortgage. Scores can range anywhere between 300 and 850.

A poor credit score may not prevent you from obtaining a mortgage, but it can certainly affect the interest rate offered with the loan. The better the credit score, the lower the interest rate will often be.

If you have a score of 620 or below, you may consider applying for a government-backed Federal Housing Administration (FHA) loan if you are not eligible for a Veterans Affairs (VA) loan. However, some FHA lenders may require a score of 620 to 640 for approval.

You can still get a conventional mortgage not through a federal government-backed lender, although it is easier to qualify with government lenders with less-than-stellar credit. Lenders will look at a number of factors when determining whether to offer you a home loan, including the down payment amount, the types of property desired, the maximum debt-to-income ration allowed, the minimum income allowed for the loan, and lender fees. It is always a good idea to shop around when looking for a home mortgage, and never take the first offer. Review the different options available to you before making a selection.

If you have a bad credit score and still would like to be approved for a home mortgage, you can improve your chances by getting a co-signer. A co-signer is someone whose credit score is better than yours and whose financial situation can help you be approved for the loan. That person will sign on the mortgage documents with you and will be equally responsible for the obligation. It is a big decision to make since your inability to pay the loan will negatively affect the co-signer’s finances, as well. Before you contact a relative to see if he or she will co-sign, review your financial situation to make sure you can make the payments regularly. If you cannot, it may be advisable to find another alternative.

It can also be helpful for the borrower to make a larger down payment when purchasing the home in lieu of finding a co-signer. Making a larger payment upfront will decrease the risk of default, making the lender more likely to issue the loan.

If you have time and can hold off on purchasing a home now, it may be advisable to work on your credit score to improve it so that you will be approved for the best loan possible.

Please click here to read more.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

 

 

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

Two New Ways to Raise Your Credit Score

Credit scores play a major role in your ability to do many different things in life, ranging from getting a mortgage or car loan to being approved for renting an apartment. A good credit score can also secure a lower interest rate when you do receive financing for a large purchase. It pays to have a good credit score and rebuilding a damaged credit score can take time.

There are two new ways to boost your credit score. These new programs include the UltraFICO from Fair Issac, the creator of the FICO Score, and Experian Boost. These two new programs can potentially help you increase your score, especially if you have a limited credit history or have a lower credit score.

UltraFICO

The first of these scores, the UltraFICO was launched in January 2019 and is planned on being available to most lenders in the U.S. by mid-2019. The program is part of a joint venture with FICO, Experian and Finicity. UltraFICO allows FICO to look at a consumer’s bank and financial accounts to show lenders that you do have savings and the money available to make loan or credit payments if approved for financing.

FICO anticipates that this program will benefit approximately seven out of ten consumers whose financial accounts can show a history of good savings and financial behavior. Even consumers who do not have a FICO score currently could still be eligible to receive an UltraFICO score.

This score could be more beneficial to someone who has a rather large bank balance but a limited credit history. So long as the consumer can show he or she can save money responsibly, the fact that he or she has not applied for credit much in the past will not hurt them with the UltraFICO score.

One point to keep in mind is UltraFICO is only available for loans or credit cards that are applied for with a lender who uses Experian. If the lender uses Equifax or TransUnion, the borrower will not be able to take advantage of this opportunity. Before applying for the loan or credit, as the company which credit bureau they use to review new applicants. If the company says they do not use Experian, it may be advisable to use another institution if you believe the UltraFICO score will help you.

Experian Boost

Another program is set to be released in the early months of 2019, known as Experian Boost. The Experian Boost program is different from UltraFICO in that it allows lenders to review the borrower’s financial history through their bank accounts, specifically related to utility bill payments. The key is not to see that a consumer has a sizeable savings but rather a demonstrated, good history of paying his or her utility payments in a timely manner over a set span of time. Also, unlike the UltraFICO score, the data found through this review is added automatically and directly to your Experian credit report. The borrower must opt in to allow his or her utility information to be visible in the Experian credit report, and if the results are positive, they will be posted immediately to the borrower’s Experian score. Borrowers are allowed to sign up for early access to the program.

Please click here to read more.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Credit Card Debt, Debt Relief, Timothy Kingcade Posts

Do Not Believe the Lies Debt Collectors Tell You

Debt collectors will tell you just about anything to get you to pay on a debt. They are persistent, to the point of being rude or even harassing at times. One thing that many debt collectors, especially the less-than-reputable collectors bank on is the fact that you will not know when your rights are being violated or when you are being lied to.

How do you know whether you are being fed a line or whether you are being told the truth by a debt collector?   Here are some of the most common lies debt collectors will tell you.

Threatening to take you to court – even jail.

Under the Fair Debt Collection Practices Act (FDCPA), third-party debt collectors cannot threaten to take you to court on a debt if they have no intention of actually doing this. Many also will threaten to garnish your wages if you do not pay. Wage garnishment does not occur that easily. It only happens after a debt collector files a formal legal claim against you, a hearing is held where you have the right to present your side of the story, and a judgment is issued. Only then can a debt collector file a wage garnishment, which still has to be granted by the judge before your wages can actually be garnished. Many collectors, however, will make these statements in hopes that they will scare you enough into paying them.

The debt collector does not have to prove you owe the debt.

This lie is another one that goes directly against the FDCPA. If you are contacted by a debt collector who claims you owe money on a debt, you have the right to request written proof or validation of the debt. You then have 30 days normally to dispute the debt, if you do not believe you owe it. In fact, under the FDCPA, consumers have the right to send the debt collector a formal letter known as a “debt validation letter,” requesting more information on the debt to see what amount is owed.

This validation includes a complete payment history, a copy of the original loan agreement or credit application and proof that a third-party debt collector has the right to contact you on the debt, if someone other than the original creditor has contacted you. Many collectors will say they do not have to legally provide you this proof, but that statement is completely untrue.

Additionally, according to the Federal Trade Commission (FTC), if a creditor cannot validate a debt, the creditor cannot collect on the debt, is not permitted to contact you on the debt, and is not allowed to report your debt to creditor bureaus. Violating this provision is a violation of the Fair Credit Reporting Act and can result in a $1,000 fine.

Paying off the debt immediately will improve your credit score.

Mentioning your credit score is often a quick way to get you to act, and debt collectors know this fact. Many collectors will claim that you can immediately improve your credit score if you pay them immediately. The problem is, once your debt is in collections or is considered 90 days past due, this blemish will stay on your credit reporting even if you make an immediate payment to the debt collector. They cannot promise that your credit score will improve with that payment because it simply is not possible. It is possible, however, to get a written agreement from the creditor or collector that they will remove all negative information from them on your credit report, but most consumers are not aware of this possibility, so it is rarely utilized.

Threaten to expose your debt to others.

Debt collectors may also threaten to expose you and the fact you owe this debt to others you know, including family members, friends, even your employer. However, under the FDCPA, debt collectors are prohibited from revealing any information about the debt to anyone other than the debtor. This protection is meant to keep the debtor free from intimidation or harassment from debt collectors and to keep this information private, as it is personal information only to the debtor. If the collector makes this threat, report the company immediately to the FTC as they are violating federal law.

Please click here to read more.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

The Top Ways to Avoid a Financial Crisis, according to a Bankruptcy Judge

No one wants to think about what he or she would do if faced with a major financial crisis. However, what if the unthinkable happens, and you find yourself facing a financial situation you never thought you would encounter? Some bankruptcies are precipitated by events that are beyond a person’s control – for example, a major health crisis, a job loss or divorce.  But a number of causes are entirely within a person’s power to stop. After 12 years serving as a bankruptcy judge, the Hon. Margaret Cangilos-Ruiz, the chief judge for New York’s Northern District Bankruptcy Court says she has seen it all.  In a recent interview with MarketWatch, she shared her insight on how people can avoid bankruptcy and setting foot in her courtroom.

Monitor Your Credit Cards

It can be very easy to rely on credit cards to make all of your daily purchases. However, when that bill comes in the mail, and you see just how much these small purchases add up to, the outstanding balance can be more than you predicted. It can also be tempting to only pay the minimum balance listed on the statement, promising yourself that you will be catch up on the payments eventually. A good rule of thumb is to never carry a credit card balance from month to month. If at all possible, it is best to pay the balance in full, but if this cannot happen, put together a plan to pay off the balance completely over time.

Not only should you not carry a large balance for too long on your credit cards, it also helps to pay them on time. As soon as you miss one or two payments, your card’s interest rates will skyrocket, making it even more difficult to pay down the balance. As soon as you receive the bill, make sure you do not put it aside and forget to pay it. You will be saving yourself hundreds of dollars in fees and penalties for the long run.

Monitor Your Credit Score / Report

It also helps to keep an eye on your credit score. A good credit score will make it easier for you to take out a loan in the future for big purchases, such as a home or a car. Also, you never know when you will hit a rough patch down the road and will need to take out a loan to help finance medical bills or pay off an unexpected expense. By periodically checking your credit report, you can keep track of your score and also make sure that no incorrect accounts or mistakes are on your credit report. It is best to discover these issues ahead of time and fix them before they become a bigger problem.

Practice Responsible Spending Habits

Paying off your credit card and creating a budget is one thing, but these cannot be possible without controlling your spending. One of the biggest ways to do this is to limit how much you spend on “non-necessary” items and differentiating between something you want and something you need. If there is a large item that you want, save up for that item and only purchase it when you have enough money to pay for that item. Keep an eye on the small purchases you make on a daily basis, as those do add up. Many consumers find success in allowing themselves to use a certain amount of cash every month on non-necessary expenses. Once the cash is gone, they are not able to purchase anything more of their “wanted” items. Resist the urge to rely on credit cards to pay for a cup of coffee or a new shirt after you go through your cash allowance for the month.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

 

 

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

What Bankruptcy Does to Your Credit Score

A common concern people have when filing for bankruptcy is the effect it will leave on their credit score and their ability to access credit, again. While bankruptcy does affect your credit score, it is sometimes the last resort to rebuild your credit and your financial future. In fact, it is oftentimes easier to reestablish your credit after filing for bankruptcy, because you are essentially given a “clean slate.”

It helps to sort through the myths and facts before making that final decision, and if you do choose to file for bankruptcy, this does not mean all hope is loss. There are proven ways to rebuild your credit score after bankruptcy, and our clients are proof!

My credit score said on all three reports 775, I couldn’t believe that I had such a great score before 10 years. Tim for me was the best move I have made for my situation. I have no regrets, I am glad the past is the past. – Bill T.

Hi Tim- I just wanted to send a quick note and thank you and your team for handling my bankruptcy case.  It is only a month or two after discharge, and my credit scores are already in the upper 600’s. – C.S.

The effects of bankruptcy on a person’s credit score depends on the score the filer had before filing for bankruptcy. If you have a higher credit score, the effect the bankruptcy will have will be more noticeable. However, if you have a lower credit score to begin with, the change may not be as much after filing for bankruptcy.

According to data from FICO, for individuals who had credit scores of 780 or more, the average amount of decrease is around 240, with a resulting credit score of 540. If the filer had a fair credit score of around 680, the decrease is on average 150 points, resulting in a score of 530. Both scores end up at roughly the same point, but the drop that the filer sees in getting to that score is noticeably different.

The good news is the American credit scoring system allows consumers to rebuild their credit score quite quickly after filing for bankruptcy. Even with a credit score at 550, you can still get back to a respectable score within one to two years through demonstrating good financial habits.

These habits include monitoring your credit report on a regular basis, ensuring that any accounts that are at a zero balance. Many financial experts recommend using a secured credit card to use for purchases to rebuild credit. After some time has passed and you have successfully used the secured card for a period, you may be able to slowly take on new credit, although it is never recommended that you have more than one account opened within a six-month period.

Rebuilding your credit is important for many reasons, the main one being it will allow you to be able to borrow in the future. Many filers worry that they will never be in the financial situation to purchase a home or qualify for another loan- these are all bankruptcy myths. Stick to a budget and a sound financial plan following bankruptcy, and you will be back on your feet before you know it.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

 

Bankruptcy Law, Debt Relief

Bouncing Back from Bankruptcy Can Happen Sooner than you Think

There are many misconceptions surrounding the amount of time it takes to rebuild credit after bankruptcy.  But a new study reveals that individuals who file for bankruptcy can improve their credit score sooner than they think.

According to a recent study by LendingTree, more than 40 percent of consumers end up having a credit score of 640 one year after filing for bankruptcy. Approximately 65 percent of filers see the same score, at least, three years after the bankruptcy case is over.

What the study showed was that it is possible to bounce back from a bankruptcy, and relatively quickly. With proper planning and financial insight, it is possible for a bankruptcy filer to get back on his or her feet financially.

It helps to first evaluate how you got to the situation where bankruptcy was needed. Were you spending beyond your means and relying too heavily on credit? Perhaps a medical crisis brought on the debt or an unfortunate event like the loss of a job or a divorce caused the hardship.

The next step is to work on rebuilding your credit. One of the best ways to get credit back to where it once was is to pay all bills on time every month. Missing a payment is such an easy way to hurt your credit score. Put together a budget, see what your monthly expenses are, and stick to that budget. Make sure you have enough income every month to meet your monthly obligations, and set up automatic payments, if needed, to be sure no bills are missed.

In addition, the use of a secured credit card can also help rebuild credit. While these cards do have higher fees and lower spending limits, they can be excellent ways to build up credit and show that you can continue making payments on a card on a regular and consistent basis.

Once you use a secured credit card for a period of time, try to find a card with a lower interest rate. However, the key is to not overspend with this card. Use the card for only necessary expenses and make sure that the balance is paid off in full on a monthly basis.

Experts also recommend that you set up an emergency fund or savings account in the event you run into a financial crisis again in the future. Try putting away a small amount of money regularly on a monthly basis, if not setting up an automatic transfer into savings if possible. By having this emergency fund there, you are protecting yourself from having to rely on credit again in the event a major crisis occurs.

Following these tips and recommendations can help you rebuild your credit after bankruptcy. It may seem like the impossible dream, but with hard work and determination, it is possible.

See what some of our clients have to say about their credit score after filing for bankruptcy…

My credit score said on all three reports 775, I couldn’t believe that I had such a great score before 10 years. Tim for me was the best move I have made for my situation. I have no regrets, I am glad the past is the past. – Bill T.

Hi Tim- I just wanted to send a quick note and thank you and your team for handling my bankruptcy case.  It is only a month or two after discharge, and my credit scores are already in the upper 600’s.  I’ve sent a screenshot if you would like to use this to show prospective clients. – C.S.

Click here to read more on this story.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

 

Bankruptcy Law, Credit Card Debt, Debt Relief, Timothy Kingcade Posts

How to Lower Credit Card Debt and Improve your Credit Score

Having a good credit score can make many things in life easier, especially when it comes to purchasing a new home or vehicle. However, it can be easy to get off track. Credit card debt with a high interest rate is one way to lower your credit score, but for many Americans, that is exactly what has happened to their financial situations.

The problem of credit card debt may be more widespread than we think. According to Experian, the average American consumer owes more than $6,000 in credit card debt. This figure has gone up three percent in just one year. This amount of debt can be very difficult to get out of, even for someone earning a decent annual income.

Retail credit cards can be particularly tempting, especially when offered a great deal at the cash register, but these cards come with high interest rates and can be easy to rack up debt. Unless you are able to pay the retail card off in full after making the purchase, it is not recommended that you sign up for these department store cards.

Many consumers believe that not having a credit card is best when it comes to staying out of debt, but it is important to at least establish a credit score. Having one card, using it for minimal expenses and making payments on the balance in full on a regular basis every month can be an excellent way to establish that strong credit score. In fact, by having a high credit score, you have a better chance of getting a card with a low interest rate when opening the account.

What happens if you do have credit card debt that has gotten out of hand?  If possible, it is best to make a larger payment than the minimum payment amount. If any extra money is available in the person’s budget, it is best to put that extra money towards paying the debt. In addition, it can help to focus efforts on one card at a time, usually the card with the highest interest rate first. Once that card is paid, focus all the money that was going towards the first card on the next one and so on until the accounts are paid in full.

If you are not able to keep up on payments, contact the credit card company to negotiate a lower payment. If you fall behind on payments, it may be wise to contact a credit counselor to discuss repayment plans or negotiate the debt amount. If you are not able to make either of these options work, it may be time to talk to a bankruptcy attorney to discuss the options available to help eliminate the debt.

Click here to read more on this story.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Bankruptcy Law, Credit, Credit Card Debt, Debt Relief, Timothy Kingcade Posts

Tips to Improve Your Credit Score

A consumer’s credit score can mean so much when it comes to buying a home or car, but once your credit score takes a serious hit, whether it be due to a default or a bankruptcy, you can start to rebuild your score immediately.  One of the biggest misconceptions about filing for bankruptcy is that it will ruin your credit score and your financial future.  To the contrary, after filing for bankruptcy you can begin restoring your credit right away.

Here are some tips to improve your overall credit score.

  1. Understand How Credit Scores Are Calculated

It helps to first understand how credit scores are calculated. These reports are issued by the three major credit reporting companies, including TransUnion, Equifax, and Experian. The scores range between 350 to 800. The higher the score, the better. A credit score is calculated using that person’s payment history, the amounts owed on each account reported, how long that person has had a credit history, and how much credit activity is on their account.

  1. Make a Goal

If you want to improve your credit score, it is important to set goals. Set the number you would like to see your credit score within a certain period of time. For example, you may choose to set a goal of increasing your credit score by 50 points within the next four months. 

  1. Keep an Eye on Your Credit Report

The best way to know where your credit score falls on the spectrum is to keep an eye on your credit report. Free credit reports can be requested annually online or by mailing a request to Annual Credit Report Request Service at P.O. Box 105281, Atlanta, GA 30348. After receiving the report, it is recommended that you carefully review all accounts listed. If you see any accounts that you know you did not open and could have been created due to identity theft, this information should be reported immediately. If an account is listed that should be closed, you can contact the company directly to update that information. The same would go for if any incorrect information is found on the report, such as a late payment incorrectly put on the account. Correcting this information can result in your credit score going up a few points. Keeping a close eye on your credit report can also allow you to track progress if you are working hard to improve the score.

  1. Pay Your Bills on Time

The best way to keep your credit score looking good is to pay your bills on time. Credit builds up over time, and this is done through consistent and positive financial behavior. One way to ensure this happens is to sign up for automatic or online payments so that these expenses are paid automatically and require no action by the account holder. If you are not able to pay a bill on time, it is best to keep late payments to no more than 30 days. The reason for this is most creditors will not report late payments until they are 60 days late.

  1. Focus on the Bad Debt

Paying down your debt is an excellent way to improve your credit score, and it helps to start with what is considered “bad” debt first. If you have multiple credit cards, choose the one with the highest balance and/or the highest interest rate. Focus your efforts on that one card, and once that card is paid, take the card that has the second highest rate. Many times, this “bad” card is the one that is the oldest and has the highest outstanding balance.

Use the debt avalanche method to attack the debt. What this entails is the person chooses the card with the highest interest rate, and he or she uses all extra money that he or she has available at paying off that card. After that card is paid off, the money that was used to pay that card goes to the next one, and so on. The idea is the money that goes towards the card snowballs in size, helping to pay each one down quicker than the person would be able to do with just meeting monthly minimum payments.

  1. Do Not Open New Credit Accounts

While you are paying down debt, it is best to not open any new credit accounts during this time. Opening new accounts will only make the goal of trying to pay off open cards even harder. It can be tempting, especially if you are offered a deal at a department store to save on a purchase, but do not fall to temptation and open that new card.

  1. Keep the Balances Low

Getting debt under control can be very difficult if the balances owed are particularly high. Credit cards that have high balances and high interest rates can be difficult to get under control. The higher the balance, the more interest is paid every month instead of money towards the principal. A good rule of thumb is to keep credit card balances capped at 30 percent of the card’s available credit. Always make sure when making payments that more money is being paid towards the card than the minimum payment. On cards with high balances, this minimum payment is normally only paying interest, which can make the cardholder feel like he or she is never going to pay the card off in full.

  1. Set up an Emergency Fund

Experts recommend that everyone have a “rainy-day” fund of at least six months of that person’s annual income. This money should be set aside in the event of a health crisis or job loss and can help you avoid the need to use credit to keep up with daily expenses.

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If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

 

 

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

When will a Bankruptcy be removed from My Credit Report?

Making the decision to file for bankruptcy is never an easy one. Many people hold off on filing for fear of what bankruptcy will do to their credit once all is said and done. However, having a bankruptcy filing on a credit report does not necessarily mean the end of your finances or your ability to access new credit in the future. It is possible to begin rebuilding credit after filing for bankruptcy.

What Type of Bankruptcy?

The most common types are Chapter 7 and Chapter 13 bankruptcies. Chapter 7 bankruptcy is also known as a liquidation bankruptcy. This type of bankruptcy involves the bankruptcy trustee liquidating assets that are not otherwise exempt and paying off the qualified debts with the proceeds. Chapter 7 bankruptcy allows you to get a fresh start financially and erase past debts, but a legitimate concern consumers have is the effects it will have on their credit score and their ability to take out credit again.

A Chapter 7 bankruptcy filing will take approximately 10 years from the date of filing before the case will come off of the filer’s credit report. On the other hand, a Chapter 13 bankruptcy is known as a reorganization bankruptcy. This case allows the filer to work with the bankruptcy trustee to put together a repayment plan to pay for some or all of the filer’s debts over the course of three to five years. A Chapter 13 bankruptcy case will be automatically deleted from the person’s credit report seven years from the date of filing.

Can the Process Be Faster?

It is possible to have the bankruptcy removed from the person’s credit report sooner than is normally allowed.  There is a big misconception that bankruptcy cannot be removed from a credit report and that you will be penalized for 10 years, not being able to access new credit.  The truth of the law or the way law is written, there’s a maximum amount of time a bankruptcy can remain on your report, but there is no minimum amount of time.

This is done by filing a dispute with all three of the credit bureaus. It is recommended that the person reviews the bankruptcy filing and the specific debts related to the bankruptcy that appear on the credit report. If any incorrect items are found, the person can file a dispute.

When a credit dispute is filed with one of the bureaus, it must be verified and validated for it to stay on that person’s credit report. If the disputed items are not verified within 30 days of the dispute, they must be removed from the credit report, including bankruptcies.

Getting Back on Your Feet.

Chapter 7 bankruptcy allows you to get a fresh start financially and erase past debts, but a legitimate concern consumers have is the effects it will have on their credit score and their ability to take out credit again.

One of the biggest misconceptions about filing for bankruptcy is that it will ruin your credit score and your financial future.  To the contrary, after filing for bankruptcy you can begin restoring your credit right away.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Related Resources: http://blog.credit.com/2018/05/when-can-i-get-a-bankruptcy-off-my-credit-report-65750/