How to improve your bankruptcy score.
By now most consumers are aware of their credit score and how to manage finances to improve their score. Here is some information about a bankruptcy risk score and how you can improve it.
Although few people are aware of their bankruptcy risk score, and even fewer have actually seen it, the score could have a big impact on your credit life.
The bankruptcy risk score is the score that credit reporting agencies use to determine your potential (risk) of filing for bankruptcy.
Improving the score could have significant financial benefits.
If you’re already looking into increasing your credit score, the good news is that those actions may dovetail with the bankruptcy risk score. According to people at the Fair Isaac Corporation (FICO), a leading developer of credit scores, you should take the following actions:
Pay all your bills on time. Late or missed payments, an account that has been referred to collections, a repossession or a declared bankruptcy can have a negative affect on your score. So, get a copy of your credit report to see if any mistakes are listed. Under the Fair and Accurate Credit Transactions Act, you are entitled to receive one free copy of your credit report from each of the three major agencies.
Check your credit report for any errors and report the discrepancy for correction.
Keep debt balances low. Don’t forget about the balance-to-limit ratio. One credit card that is at or near the limit can have a greater negative effect than multiple cards that have a minimal balance.
If you have exceeded your credit limit and are facing a difficult time, such as a medical crisis, call the creditor and explain the situation. See if the creditor can work with you and possibly come up with a repayment plan.
Open accounts only when necessary. A person who opens several accounts in a short period of time is statistically more likely to have problems repaying creditors. This can result in a dropped credit score and bankruptcy risk score.
If you’ve paid off a credit card you may not want to close the account because long credit histories help lenders decide whether they want to do business with you. If there isn’t any fee or penalty for having the card without it being used there is benefit to keeping the card.
Limit credit inquiries, and don’t apply for unnecessary credit. Statistically, a person whose credit report shows an application for new credit six or more times in the past 12 months is eight times more likely than other consumers to file for bankruptcy.
However, there are times when shopping for new credit isn’t necessarily riskier. When you are looking for the best mortgage or an auto loan, multiple lenders may request your credit report or score even though you’re only looking for one loan. Fortunately, the bankruptcy risk score counts most multiple auto or mortgage inquiries as just one inquiry.
If money is tight and you are starting to search the couch cushions for spare change, don’t forget that you can do a free money search for unclaimed property. Unclaimed money and property in excess of $25 Billion is being held by the government. This found money is waiting to be claimed.
