People, who are not able to pay their creditors back due to lack of resources, file for personal bankruptcy. After being declared legally bankrupt, a person's financial record becomes public, which means that anyone who wants to know about the financial status of the person are provided access to those records.
Although a bankrupt person is absolved from past financial burdens, the financial future of that person can become bleak. This is because the individual will get a bad credit rating and will be unable to secure any type of loan at a low rate of interest. In a market heavily dependent on credit ratings, a bad credit report can make an indelible mark on an individual's financial reputation thus impacting the financial plans that he or she may have for the future.
Negative information in a person's credit report such as bankruptcy can only be erased by the passage of time. A consumer reporting company can report very accurate and precise bankruptcy information for 10 years after the bankruptcy is filed. Even if a person files for bankruptcy and dismisses it before it is discharged, the credit report of that person will mention that he or she has filed for bankruptcy.
However, this does not mean that a bankrupt person can never get loans again. It only means that the interest charged on credit cards and loans will be higher than what a person with good credit ratings can get. There are many steps that individuals who have filed for bankruptcy can take in order to improve their credit rating. It is important to obtain a copy of the credit report from reporting companies such as, Experian, Transunion and Equifax and review them carefully for inaccuracies or mistakes. If there are mistakes, then the agencies have 30 days to investigate and correct the alleged mistake
If there are no errors in a person?s credit report after filing for bankruptcy, then the credit rating can be improved by starting to build a good reputation taking steps like using only the secured credit card which is issued after bankruptcy, using the card to make small transactions and ensuring timely credit card payments. Bankrupt individuals should also discharge any student, car or mortgage on time. A bad credit rating cannot improve overnight. It takes a lot of honesty and care on the part of the bankrupt person and will slowly but surely improve if the steps mentioned above are taken.
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