Bankruptcy: Rebooting Your Credit Life

For many people, bankruptcy is a scary concept, something to be avoided at all costs. However, the truth is that legal bankruptcy can relieve you of major financial burdens and allow you to begin planning a debt-free future.


Two Types of Bankruptcy

In essence, declaring bankruptcy is a way of telling the United States court system that you can’t currently pay your debts. There are two main kinds of bankruptcy for individuals (as opposed to businesses). A Chapter 13 bankruptcy lets you negotiate with your lenders and come up with new payment plans that you can manage. In most cases, people must make all of their payments within five years.

If you don’t have much in the way of disposable income, a Chapter 7 bankruptcy may be the option for you. Unfortunately, it will require you to sell or cash in some of your assets in order to pay certain bills. On the bright side, this measure will eliminate some of your debts ― medical bills, for instance ― so you can forget about them entirely.

The Procedure

If you’ve decided to file for bankruptcy, your first task is to find a lawyer you can afford. That attorney will explain all of the details of the process. She’ll also supply you with the forms you’ll need and help you to complete them correctly.

Later, you’ll have to appear in court at a 341 hearing, which some or all of your creditors may attend. There, you’ll discuss your debts and assets. If you’re going through a Chapter 7 bankruptcy, your debtors’ official representative, who’s known as the bankruptcy trustee, will help figure out which of your possessions you’ll be required to liquidate.

As part of your bankruptcy responsibilities, you’ll need to take a class that will review methods for handling your personal finances. In addition, you should know that, under the law, your boss isn’t allowed to fire you merely because you’ve declared bankruptcy.

Next Steps

Once your bankruptcy is behind you, a good first step is to carefully prepare a budget for yourself. Make a thorough list of your monthly expenses and compare it to your monthly income. Of course, you should be spending significantly less than you’re making so you can grow your savings and build up an emergency fund. If you’re spending too much each month, do whatever you must to reduce your expenditures, increase your income or both.

For example, you might look for a job that pays more, or even get a second job. You could move to a cheaper apartment, or you could sell your home and buy one that’s smaller and more affordable. Why not give up golf, forego cable TV or start using less smartphone data? Whatever you can think of to get on solid financial footing, take that action at once.

If you obtain a secured credit card with low fees, using it in moderation should help you to raise your credit score.

Especially important, make sure that you pay every bill on time. It’s worthwhile to set up as many automatic electronic payments as you can. That way, you’ll be less likely to forget to pay a bill. Also, keep checking the bank accounts from which your automatic payments come. Obviously, you don’t want to overdraw from one of them.

When it comes to the bills you can’t automate, try using an app or an old-fashioned calendar to remind yourself of due dates. Moreover, make each of those payments several days before they’re due. You don’t want unforeseen circumstances to somehow prevent you from paying on time.

The services of an excellent credit repair company can likewise enhance your credit report. Such a firm will scrutinize your credit history, find mistakes that are hurting your score and contact the proper credit reporting agencies to get them erased.

As time goes by, keep reviewing copies of your credit reports. If you ever spot a sudden drop in your score, you could get in touch with a credit repair company to see if an error was involved.

A Tricky Decision

It probably goes without saying that bankruptcies aren’t entirely positive. This legal process will damage your credit score, and a bankruptcy notice will stay on your credit record for a full 10 years. And, even though there’s no reason to, you may experience some lingering feelings of failure or shame after you file for bankruptcy.

However, these days, lenders tend to be more lenient with those who’ve declared bankruptcy than they once were, especially people who’ve only gone bankrupt one time. Thus, you shouldn’t expect that you’ll have to pay enormous interest rates for all of your future loans. In some cases, though, you might be required to explain to potential creditors why you chose to declare bankruptcy.

In the final analysis, bankruptcy is certainly a serious and consequential action. At the same time, it can be a uniquely valuable tool for those who find themselves in difficult financial situations. Many people are able to turn their lives around as soon as they take this step.



Can a Credit Repair Service Really Fix Your Credit?

Are you facing issues from your past that are weighing your credit report down? If so, a repair service might be of some assistance. However, many Americans are still unaware of what these companies actually do. So before you draw any conclusions, it is important to understand how these services can help you fix your credit.

It’s also important to educate yourself on what a credit repair service does not do. That is, they don’t focus on building your credit rating, nor do they help with consolidating debts. It is all about fixing erroneous credit reporting issues. While there may be adverse effects (maybe your score goes up), this is not the main purpose of a credit repair service.

Fix Your Credit

What Do Credit Repair Companies Do?

A credit repair company will try and fix any damage on your credit report. This is done by collecting a copy from each bureau for analysis. The service provider will carefully comb through and try to identify errors. It could be anything, such as HR reporting errors at work or signs of identity fraud.

The FTC reported that one in 20 American consumers have credit report errors. Of that group, one in 20 saw a 25-point or more score increase by fixing the error. A further one in 250 saw a 100-point or higher change afterward.

Fixing any negative items on your credit report can be very profitable. A shift in your score could result in thousands (or more) in interest savings. Just think when it comes time to buy a home, how much could you be losing to negative items?

Fixing Negative Items the Right Way

Credit repair companies are experts at managing credit report errors. This hands-off solution leaves you not having to worry about the outcome. It also means saving endless time on handling the issue. After all, the average amount of time spent to fix an identity theft issue is 30-60 hours.

By hiring a company to do it for you, the entire process becomes painless. Here are the steps that are typically taken to repair your report:

1. Request a copy of your Equifax, Experian and TransUnion file

2. Compare data with you to see if there are any inconsistencies

3. Point out any errors which should be reported and removed

4. Report such errors to the respective credit bureaus

5. Follow up and work with the bureaus till its resolved

What Types of Credit Report Errors?

Every error should be taken care of as it is found. Failing to do so can increase your risk of becoming an identity theft victim. It could also prevent you from qualifying for a credit card or loan — particularly if your score is suffering from the error.

Some items a pro might dispute in order to repair their credit include:

•    Information that is no longer current

•    Inconsistencies between each bureau’s file

•    Reporting errors from your work’s HR department

•    Non-updated information after a divorce

•    Wrongly reported late payments and charge-offs

Credit repair services also help with bankruptcy procedures and post-bankruptcy recovery. There are many things that come into play when making sure your file is clean and up-to-date. For example, sometimes discharged debts are reported incorrectly. They should always have no balance and a reference to why.

Can You Fix Your Credit Errors Yourself?

It is always an option. However, the best credit repair companies have spent many years doing this every single day. It will take you longer and the chance of success is a little or lot lower, depending on the circumstances. You will have to learn how to dispute credit report errors from scratch — which takes even more time.

The easy thing is finding the errors. You can help a credit repair agent with that process. From there, it becomes clear what the path forward will be. Some errors just require an update of your information (i.e., address changes). But others are more serious and require negative item removal.

Furthermore, there are many things you might not be aware of that are actually errors. One such example is if you close an account yourself and the entry says that it was closed by the grantor. This can hurt your credit score as it appears that there was a reason for them to stop doing business with you. Removing the “grantor” label would potentially increase your rating and it makes you look better.

Of course, there are some situations you can handle without help. For those that already know their errors, try contacting the credit-reporting company that caused it in the first place. Sometimes you can mitigate the issue right away. But definitely hire a professional if you have a lot of errors or if the damage goes back years.


Credit repair services offer legitimate solutions. However, too many borrowers are unaware of what these businesses provide. It is something that you should seek out after bankruptcy, credit fraud or identity theft. Sometimes it is even necessary once you go through a divorce — especially if you carried extensive joint debts.

The bottom line is, don’t let errors on your credit report hold you back, fix your credit. Hiring a professional credit repair service will save you time, money and may even improve your credit score along the way.


Credit Limit Increase – How and When Should You Request

A credit limit increase is a net-positive scenario for your credit rating and report. You just have to avoid spending your balance and carrying a higher debt. If you can accomplish that, your credit limit increases will benefit your utilization rate. This is huge as it accounts for 30 percent of your FICO score calculation.

However, there is always a right and wrong time to try for a limit increase. You need to know the best approach for this process before moving forward. To understand more, read the advice found below.

Credit Limit Increase


How You Request a Credit Limit Increase

You can call the support line for your credit card issuer. From there, it is possible to inquire about adjusting your limit higher. This might result in a hard inquiry, but it is not always necessary. It all depends on your card provider and the strength of your credit report on your initial application.

Some card providers even offer the chance to request a limit increase online. Check your dashboard for this option to find out more. Also, take a look below for an idea on which card issuers require a hard inquiry to qualify.

Hard vs. Soft Inquiry, What Will Your Card Issuer Do?

Many cases vary based on the amount of the increase. For instance, anything above $1,500 through Wells Fargo typically requires a hard pull. Below that amount, however, would be a soft pull.

Here’s a look at what to expect from many popular card issuers:

  • American Express: No hard inquiry is required.
  • Bank of America: Usually a hard inquiry through TransUnion.
  • Capital One: No hard inquiry is required.
  • Chase: A hard inquiry when you request an increase.
  • Citibank: Some increase requests require hard inquiries.
  • Discover: Larger increases require a hard inquiry.
  • USAA: Usually a hard inquiry through Equifax.
  • S. Bank: Larger increases require a hard inquiry.
  • Wells Fargo: Certain cases require a hard inquiry.

Of course, these claims are not set in stone and can change with time. Your issuer might treat your situation different than others. It is best to ask first. If you are offered a credit limit increase suddenly, chances are you are pre-approved and the inquiry might not be necessary.

When to Ask for a Credit Limit Increase

You can ask your card provider for an increase at any time. The likelihood of approval will boil down to your credit history and your repayment history with that company. Sometimes there will be a hard rule in their system for accepting increases, such as only after so many months.

If your credit score is less than perfect, you might not hear about the possibility of increasing your limit any time soon. You can always ask your card issuer to see if there is a typical time frame for when the offer increases.

Tip: Wait until you get your first increase from the card provider, as it is likely to happen, and then inquire 3 to 6 months later about a further increase.

Requesting Credit Limit Increases on Secured Cards

This is where things get a little tricky. Secured cards do not work the same as unsecured cards. Some can transition into an unsecured card, and you might get your security deposit back, but not all issuers offer this.

You need to look for a secured card that converts to unsecured. This action lets you continue with the same credit line, which won’t hurt your average account age. You can take on the higher limit as well and get the utilization rate boost. Plus, it gives you the chance to give a higher deposit to build off.

What to Avoid When Asking for a Credit Limit Increase

First off, you should not make it look like you need the extra money. It should be about growing your overall credit availability and proving yourself with higher balances. This is necessary to show that you are a good borrower, beyond a measly $300 or $500 credit card. It will help you with proving yourself to an auto or mortgage lender, too.

The biggest sign of needing the extra cash flow is requesting the increase when your balance is near the limit. This shows you potentially cannot repay what you owe right now and that you might need extra financial assistance at the moment. So bring your credit utilization rate for that particular card to 30 percent or less.

You can always put the balance on a difference card for the month leading up to when you inquire about raising your limit. This is even more effective if your card issuer does not plan to pull your credit file. However, if a hard inquiry is necessary, it is better to reduce your overall debt load before you inquire.


Credit limit increases are golden opportunities for people looking to build credit. But it can be hard to get them if you have a lower credit score. You never want to deal with rejection, and hard inquiries can hurt your credit. However, the better credit utilization rate and long-term effects make it all worthwhile.

Take your time to plan out when and how you ask for a credit limit increase. Your issuer wants to make more money — so chances are you will get an offer soon enough. But you should still learn how your issuer typically handles increases and make your own request when it seems right.