The North Carolina Bankruptcy Information Blog

Whether it’s because of unemployment or underemployment, the remnants of the real estate reckoning, major medical costs, mounting credit card debtloads, a recent bankruptcy, or some combination thereof, in recent years average Americans have experienced some hard hits to their credit scores.

But according to a new report by The New York Times, there are simple strategies that all of us can employ to bump up a beleaguered score.  “The simple answer is to focus on the information that is used to generate the all-powerful FICO score — the measure used most frequently by traditional lenders to determine creditworthiness. Its scale runs from 300 points to 850 points; the higher the score, the better your credit standing.…

It seems that in today’s difficult economic weather, just about everyone is a risk for a lender.

Earlier this month, FICO, Inc. (the company that develops credit risk metrics) reported that America’s collective credit score is at an all-time low. Close to 43.4 million consumers have a credit score at or below 599, which is the risk benchmark for the majority of lenders. This means that more than 25 percent of us are likely to not get a car loan, new credit card (really?) or a mortgage.

FICO arrived at their conclusion through an analysis of April’s consumer credit reports. Historically, only 15 percent of all “credit-active” consumers fell below the 599 mark.…

By now most consumers know that one of the first things to take a hit when debt problems come knocking is the good ol’ credit score. Sometimes people end up with a bad debt hanging like an albatross around their necks–and dragging down their credit scores–for years. But there is light at the end of the tunnel: negative information can only legally remain on your credit report for so long before it gets wiped away. After 7 years, you can expect a bad debt to be scrubbed from your report; but can you rely on the credit reporting system to ensure you’re not getting a raw deal?…

Most people believe that their credit rating will be ruined for the next 8-10 years if they file for bankruptcy. This could not be further from the truth.
Bankruptcy is not a shiny gold star on your credit report, that is for sure, but it is far from a death toll on your credit. In reality, your credit rating is already pretty darn low from all the missed and/ or late payments you have been piling up prior to filing. While I highly doubt any creditors will actually see things this way, filing is actually you showing that you do want to improve and do better for the near and foreseeable future.…

Buying a home after bankruptcy is a smart move. And yes, it is possible! If you don’t own a home already, buying a house is an excellent step toward rebuilding your financial life. A home can be a great investment because it is one of the few major assets you will own that will hopefully appreciate over time. Home ownership also demonstrates stability, which can reflect positively on your credit profile.

The good news is, as soon as a year after your debts are discharged in a Chapter 7 bankruptcy, you may be eligible for a good car loan, and just two years after completing a bankruptcy, you may become eligible for a home mortgage with a good interest rate.…

The automated credit score was created in 1959 by the Fair Isaac Corporation. While “Fair Isaac” may not seem so aptly named for those who are struggling with low credit scores, the FICO system is the most commonly used numeric benchmark by which our lending and credit system measures financial wherewithal.

Unfortunately, so few of us really understand how that number is determined. In fact, if the credit rating system took a more open approach to communicating its processes, especially given the impact they can have on our livelihood, perhaps not as many people would be facing economic trouble. It is certainly worthwhile for anyone facing credit issues to understand as much as possible about how that three-digit number comes to pass.…