In these difficult economic times, unfortunately, many good people have had no choice but to declare bankruptcy and start over. Bankruptcy, of course, isn’t a permanent condition—eventually, these folks will re-emerge, and when they do, most have roughly the same question: how do I rebuild my credit?
Building your reports and scores back up is an important part of re-joining the credit community, if you will. The fundamentals are much the same as when you started building credit in the first place—you need to prove your creditworthiness and reliability as a borrower. This largely means paying various bills on time, or repaying any outstanding loans on schedule.
But you might be surprised which bills don’t really help you rebuild credit.
Today, Quizzologists are focusing on accounts that you may very well need, but which won’t play a big part in restoring your credit to health.
Among these not-very-helpful bills:
Rent: You need to live somewhere, sure, but the mere act of paying your rent won’t help you. Conversely, however, failure to pay can result in actions in small claims court, and collections agencies can be put on the job of recouping what’s owed. This can cause major problems for your ability to rent apartments or houses in the future.
Medical Bills: If you don’t have your health, what do you have? Well, not much, but paying off these bills won’t improve the health of your credit. The monthly payment you make won’t get reported to the credit bureaus—but failing to keep up with your schedule, most times, will be.
Cell Phones: Another item you may have to pay for, but don’t expect any reward for doing so on time, it won’t get reported. While being a little late shouldn’t hurt you too bad, if you start to go 30 to 60 days delinquent, you’re heading back into the kind of trouble you just got out of.
Utilities: Keeping the lights and stove on, (like keeping a phone in service), are viewed as basic necessities, not great opportunities to demonstrate your renewed ability to borrow and pay back loans to future creditors. By all means, let there be light, but it won’t rebuild your score.
Federal/State Tax Liens: Staying on Uncle Sam’s good side is important, no doubt, but if you’ve had a lien placed against you, it won’t drop off your reports and scores until it’s fully satisfied. So, alas, no bonus brownie points for getting right with the government.
If you’ve declared bankruptcy, these kinds of bills and accounts won’t give you any extra opportunities to rebuild your battered scores. The (semi-) good news: you’re not alone. With the glut of bankruptcies in recent years, many companies are finding themselves having to be more forgiving and flexible in terms of who they choose to do business with.
Another helpful ally in this process is your bank. Ask them what lines of credit they might extend that you can grab hold of to help lift you out of your bankruptcy rut.
Are you looking to re-join the ranks of the good credit world? How can Quizzle help? Find out.