- July 10, 2016
- Posted by: Alan
- Category: Money Management
When it comes to personal finances, there are a lot of myths that can make building your credit confusing. It is important to understand these myths and how they may work either for or against your credit, especially if you are trying to financially recover from a recent bankruptcy.
The better you understand how the credit process works, the greater the chance of being successful in managing your own finances and credit. In this way you can get the things you need while repairing your credit at the same time. Read more about bankruptcy here (http://www.zerodownbankruptcy.com/).
Bankruptcy Ruins Your Credit
This myth is a little ambiguous. Yes, bankruptcy does reflect poorly on your credit. However, it may look worse to have ongoing debt that you are not dealing with or not paying. While bankruptcy does show up on your credit report, what you do after it is discharged is just as important as the fact that it exists. However, if you just kept going on with debt you are not paying for, you would not be able to demonstrate financial responsibility until all of that debt was up to date. For more information about Chapter 7, click here (http://www.zerodownbankruptcy.com/chapter-7/).
You Should Carry a Balance
This part can be confusing for some people. What creditors want to see is that you are able to make payments on time and manage your account responsibly. When you carry a balance from month to month, you are charged interest on your balance, which can quickly grow out of control. You can rebuild your credit after bankruptcy by keeping your balance low and paying in full each month, as long as you pay on time.
It Looks Better if You Don’t Use Your Credit
People who pay cash for everything or fail to use the credit available to them tend to think they are developing a solid credit history because they are not trying to live above their means. What creditors actually see is that you have not demonstrated the ability to use your credit in a productive manner. What works best is to only use part of the credit available to you. Staying below one third of the amount available is a great way to demonstrate that you are able to use your credit wisely—as long as you make payments on time as well.
Almost from the moment your bankruptcy is discharged, creditors will be offering you lines of credit. The interest rates will be among some of the highest, but you will have credit available. They do this because they know you are not able to file bankruptcy again any time soon, and they are aware that you most likely want to start rebuilding your credit score.
Compare the offers before you accept any of them. Then, use the information here to maintain your new credit accounts in such a way as to help you develop a strong credit report. Otherwise, you may end up back in the same situation again.
Please share this post online with friends and family members who are working on rebuilding their credit.
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