Good Credit Scores Can Be Achieved After Chapter 13 Bankruptcy In Chicago

12-Jan-2011 Upon filing for bankruptcy and then being discharged of your debts there is a significant impact on your credit score.

A credit score is a number between 300 and 850 and it is often used as a way to determine loan qualification. A person who just completed a bankruptcy filing can expect that their score is at the lower end of this range.

When preparing to take action to improve your credit score it is important to understand exactly what factors go into the calculation of that score.

1. Your total debt - How much money do you have to repay?
2. What is your debt made up of? - It is more favorable to have a mixed portfolio when it comes to debt. A mortgage, car loan, student loan and credit card debt will have a better effect on your score than just credit card debt.
3. How long have you had your debts? - The duration of the current debt is important because you are seen as a more reliable debtor if you had debt for a long time and have a record of full and timely payments.
4. How much of your credit are you using? - To improve your credit score you want to use between 10% and 30% of your total credit limit. Ideally you want to stay closer to 10% but that is not always possible. Getting very close to the maximum credit limit for your cards is risky and it will have a negative impact on your credit score.

Some of these factors you cannot control. If your goal is to increase your credit score you should always make payments on time and limit how much credit you use.

Another trap to avoid is store credit cards. Today you cannot walk into a Chicago retail store without being offered their store credit card and your application will be rewarded with a discount on your purchase. It may sound like a good idea but every credit card application pulls your credit score. This has the potential to bring your score down so make sure you only apply for credit if you absolutely have to.

Chang and Carlin
The content found on the Chang & Carlin site is not legal advice and is purely for informational purposes. The information contained herein is not a substitute for the advice of an attorney and does not create an attorney-client relationship. If you are interested in obtaining information about chapter 7 bankruptcy, chapter 13 bankruptcy, foreclosure services, real estate legal services, you are encouraged to call our law firm at 866-790-8601 or Request a Free Legal Evaluation. Chang and Carlin serves clients in Chicago, Schaumburg, Joliet, Warrenville, Waukegan, Illinois.