Most Americans, including Arkansas residents, strive to obtain a good credit record and score. It can be particularly important in buying a house or even a car, and for obtaining other kinds of personal credit. However, sometimes financial crises unavoidably occur, and options such as bankruptcy must be chosen to support the family’s survival.
When a bankruptcy is necessary, it accentuates the importance of re-building a clean record for the future. The credit record can be raised back up to pre-bankruptcy levels with some focused effort. One first step is to learn the facts about credit reporting, credit records and credit scores.
Remember that the credit record is an evolving, changing product and not a static object. When it gets low, things can be done to restore it back to its prior level. That is why it is particularly crucial after a bankruptcy to check one’s credit record online at least once a month.
When doing so, the individual should dispute and challenge inaccuracies wherever they appear. These will be corrected, and the score will start to go up. It’s also good to educate oneself on what makes a credit score go up or down. Creditors are not impressed, for example, with a record that has lots of accounts but no activity on the accounts.
To increase the score, make small expenditures each month and then pay them in full. Running a large balance and making minimum payments is a harmful practice. It may be an early warning sign of financial instability and a struggle to make ends meet. Additionally, if there is an open account with credit available, it usually does no good to close it, because that indicates less credit available. This has a negative effect on the score.
It’s inadvisable to ask for new accounts all at once. Too much activity tends to indicate instability and a desperate search for debt relief. Importantly, secured accounts from before the bankruptcy, such as car and house payments, should be paid on time and in full each month to demonstrate financial stability, continuity and good management skills. These general principles apply in Arkansas as well as nationwide.
Source: nbcrightnow.com, “9 things to know about your credit score”, Andrew Housser, April 29, 2015