Total Available Credit

Up to 30% of your credit (FICO) score is determined by how much you owe creditors. The ratio of this debt to your credit limit affects your score. Asking your credit card company for a credit line increase will help this ratio. But beware this request could trigger an inquiry on your credit (hard inquiry) which will negatively affect your credit score. Filing chapter 7 bankruptcy or chapter 13 bankruptcy will eliminated the debt entirely and forces the creditors to report $0.00 dollars owed but also will reduce your available borrowing amount to $0.00 when the account is closed. However, you will get tons of credit applications in the mail after filing bankruptcy. Getting a new credit card after filing bankruptcy will bring your borrowing amount back up, but you need to pay this card off every month. This in turn will bring your credit score back up after filing bankruptcy.

Type of Loan

Up to 10% of your FICO score is made up by the type of loans on your credit report. Unsecured loans such as revolving credit card loans have greater liability than installment loans. To raise your credit score you should try and pay off credit cards by taking out a signature loan (installment loan) through your bank. Pay off the higher interest rate cards first. Again if you can’t get an installment loan to pay off the high interest rate credit cards because your credit score is to low filing for chapter 7 bankruptcy or chapter 13 bankruptcy can eliminated these debts entirely. This will allow you to start fresh and repair your credit by getting a new credit card and paying it off each month.

New Inquires

Recent credit applications comprise 10% of your FICO score. Known as Hard Inquiries any application you make for a new loan, credit card, even sports club membership may result in an inquiry that will remain on your credit report for two years. Protect your credit score by avoiding applications that required your social security number. Pulling your own credit report or score is a Soft Inquire that doesn’t affect your credit score.

Payment History

Payment history can make up 35% of your credit (FICO) score. Bring past-due accounts up to date and avoid missing payments in the future is the best way to improve your credit score. If your credit report is a land mind of negative 30, negative 60, negative 120 late payments then chapter 7 bankruptcy or chapter 13 bankruptcy will stop this reporting the day you file. This in turn will allow you to start over and create a new history on your credit report.

 Length of History

Credit history can make up 15% of your FICO score. Late payments, defaults and other negative information will report for seven years and will lower your credit score. Positive information over a two year period will raise the score.

Just remember filing for chapter 7 bankruptcy or chapter 13 bankruptcy is not the end of the world, it’s a new beginning. The negative history that you created will fall off your credit report after 7 years from the default. Filing chapter 7 bankruptcy or chapter 13 bankruptcy will stop the reporting the day you file. All you have to do then is create a new history and prove to everyone that pulls your credit in the future that you learned your lesson and you are on the right track. They will see the old history and see that you filed bankruptcy but they will also see then new improved history you created after filing. As long as you don’t make payments late and don’t default on your new creditors after filing bankruptcy your credit score will dramatically increase.

Also you can keep car loan and house loans out of the bankruptcy if they are in good standing and they will keep reporting positive to your credit after filing bankruptcy.