Q:
How do you clear up bad credit?
A: There is no fast and easy way to
repair damaged credit that took months or years to occur. The law
allows negative information to appear on an individual's credit
record from 7 to 10 years.
The first step is to check your existing credit record. Anyone can
obtain copies of their own credit report free of charge if they
have been turned down for credit recently. For a fee, people can
request copies of their own credit report from the three major credit
reporting agencies: Experian at (800) 392-1122, Equifax at (800)
685-1111 and Trans Union at (312) 408-1050. The bureau also should
provide instructions on how to read the report and how to dispute
any inaccuracies it contains.
If the credit report is correct, take care
of any outstanding delinquent obligations first.
Resources: * "Rebuild Your Credit: Law Form Kit," Nolo
Press, Berkeley, Calif.; 1993
Q: What options
are there after Chapter 11?
A: A previous bankruptcy can remain
in a credit file for seven to 10 years.
Depending on when the bankruptcy was discharged and what kind of
credit a borrower has reestablished since then, it needn't be an
obstacle to obtaining loan approval. The longer ago the discharge
occurred, the better off a loan applicant will be.
Many lenders also will take into account
the circumstances surrounding a bankruptcy. For example, they
may look more favorably upon you as a borrower if your bankruptcy
was due to financial reverses you suffered due to your employer's
own financial difficulties. On the other hand, if you declared
bankruptcy because you overextended your personal credit lines
and lived beyond your means, a lender probably won't be as forgiving.
If you are in the latter category, you
may want to contact a mortgage broker who may qualify them for
a "b" or "c ," loan, which usually comes at
a higher interest rate.
Resources: * "Rebuild
Your Credit: Law Form Kit," Nolo Press, Berkeley, Calif.;
1993.
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