How to Assess Your Bankruptcy Credit Report

Posted: 30 Jun 2008 | Categories: Bankruptcy

A bankruptcy credit report is a credit report that has been negatively marred by a bankruptcy in the past. Bankruptcy is a process that is used to help someone with serious financial issues to get control of their finances again. However, there are significant negative ramifications that come attached to this process, meaning that it is not a “one size fits all” answer for everyone.

People who are facing serious financial difficulties may be led to believe that filing bankruptcy is a good solution. However, filing bankruptcy puts a seriously negative mark on your credit report. A bankruptcy credit report which is a credit report that has been marred by a filed bankruptcy can put a serious strain on your ability to borrow money for as many as ten years if you are not careful.

Bankruptcy appears in your credit report as a negative mark, and puts up serious red flags to any lenders who are thinking about lending you money. Having a bankruptcy on your credit report tells them that you are a risky proposition when it comes to lending, and it may prevent you from refinancing a mortgage, buying a car, buying a home or even borrowing money for a long time. For this reason, it is important to either find another alternative besides bankruptcy, or if you are already in bankruptcy, to find a way to make this negative mark on your credit score a lot less severe. You need to understand that a loan approval process and the interest rate you will be assessed is all based on the lender’s perceived risk for you, and the higher the perceived risk, the higher the interest rate, if you can be approved at all.

Here are some ways to make a bankruptcy credit report less severe, especially if you need to work with a lender and want to appear as less of a high-risk borrower to them.

- Avoid bankruptcy in the first place. There are instances where finances become impossible to handle, but bankruptcy is not always the answer. Consider other answers, such as debt consolidation, borrowing money from family or friends, or calling your creditors up to ask for help.

- Once you have declared bankruptcy, the damage has been done. However, pre-paid credit cards and secured credit cards can make your credit look a little bit better by showing that you still have credit. The trick here is to make all of the payments on time. Missing payments will only put you in the same hole that bankruptcy tried to dig you out of.

- If you absolutely need lending assistance and cannot get it because your bankruptcy credit report is preventing it, consider taking out a secured loan. Secured loans are loans that come in exchange for a form of collateral, such as the equity in your home or a vehicle that you own. Most lenders are more than willing to offer secured loans, because the collateral is theirs if you default on the loan and their risk factor is not nearly as high. For this reason, even if you are a high risk lender, the risk associated with lending to you is drastically decreased and may be just enough to get you out of your financial bind.

In summary, you must be aware that bankruptcy may be unavoidable and may be your best or only option. But if done with care, you can minimize the negativity associated with it so that your risk factor does not appear extremely high to the potential lender.

For more insights and additional information about your Bankruptcy Credit Report as well as getting a free no-obligation bankruptcy evaluation from a qualified bankruptcy lawyer local to you, please visit our web site at http://www.bankruptcy-data.com

Article Author :Jon_Arnold

The Glannon Guide to Bankruptcy: Learning Bankruptcy Through Multiple-Choice Questions and Analysis

Corporate Financial Distress and Bankruptcy: Predict and Avoid Bankruptcy, Analyze and Invest in Distressed Debt

A comprehensive look at the enormous growth and evolution of distressed debt, corporate bankruptcy, and credit risk default This Third Edition of the most authoritative finance book on the topic updates and expands its discussion of corporate distress and bankruptcy, as well as the related markets dealing with high-yield and distressed debt, and offers state-of-the-art analysis and research on the costs of bankruptcy, credit default prediction, the post-emergence period performance of bankrupt firms, and more. Edward I. Altman (New York, NY) is the Max L. Heine Professor of Finance at the Stern School of Business, New York University. He received his MBA and PhD in finance from the University of California, Los Angeles. Edith Hotchkiss (Chester Hill, MA) is Associate Professor of Finance at Boston College. She received her PhD from the Stern School of Business and her BA from Dartmouth College.