If you are one of thousands of people that have either declared bankruptcy, finished a debt settlement program or finished a consumer credit counseling debt management plan you may need to boost your credit score by reestablishing your credit. These programs may help you get our of debt, but they all have a negative impact on your credit score.
Debt Settlement Program
Debt settlement is reported to all three major credit bureaus and the bottom line results should read “paid in full” with maybe a notation that the debt was “settled”, meaning the debt was paid for less than the balance owed. Future creditors look upon this notation as a negative item which reduces your credit score dramatically. This notation stays on your credit report for seven years.
Bankruptcy
It does not matter if the bankruptcy declared was chapter 7 or chapter 13 bankruptcy the negative impact on the credit score is tremendous. There is a “light at the end of the tunnel” for those of you with a bankruptcy on your credit report, and it will take a little more effort to get your score back up to where you can borrow money at a reasonable interest rate. Remember, the bankruptcy notation stays on your credit report for ten years.
Consumer Credit Counseling Debt Management Program
A debt management plan freezes all ability to charge on your credit cards for the duration of the program, usually around three to four years, and may allow you to keep one credit card to charge for emergencies. Your credit report will show “paid on a debt management plan” or “Consumer Credit Counseling debt management plan”. This notation stays on your credit report for seven years.
Reestablishing your credit
The first steps in reestablishing your credit is to pay all outstanding balances in full and have each account reported accurately to the credit bureau. It really does not matter how the account was paid, as long as the account is reported to the credit bureau as “paid in full”. Either your account was discharged through bankruptcy, paid in full through a debt settlement or paid in full through a debt management plan, your account must be reported as “paid in full”.
Once the account is reported accurately you can begin the process of rebuilding your credit. The best way to do this is with a secured Master Card or secured Visa credit card. These secured credit cards allow you to charge for purchases up to the amount you have on deposit with the credit card bank, and your repayment history is reported to the credit bureau.
You can always get free credit counseling to rebuild your credit and increase your credit score with Consumer Counseling Centers at 1-888-502-3907. Call now or visit our website and be on your way to re-establishing your credit and increasing your credit score!
