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Credit After Bankruptcy
(ContentDesk) February 12, 2004--We heard re-listing results in credit score increases between 50 and 180 points - so we decided to check it out. You probably feel like you've heard this before, amazing claims that must be either impossible or illegal. That is exactly how we felt but what we found is all our research into re-listing points to an underused service that offers tremendous benefits to consumers that recently filed bankruptcy, particularly those seeking home loans or mortgage refinance. re-listing does not remove the from the credit history but it does seem to have a profound impact on consumer credit scores. re-listing services are similar to re-scoring. Why re-listing is so effective we discovered, is the circumstances that typically lead to consumer filings: 1. Many consumers that file do so after becoming overburdened by revolving debt (credit cards) that are charged to their limit. The fact the credit card accounts are at their limits has a derogatory impact the credit score. 2. Most consumers, with credit card accounts at their limits, make only minimum monthly payments (which is why the credit card accounts remain at their limits). Making minimum monthly payment brings down the credit score. 3. Once a consumer misses a payment on the credit card account, they are charged late fees and the interest compounds, sending the account over the limit. Credit card accounts over their credit limit result in further negative impact on the credit score, and a late charge by the credit card bank and frequently a sharp increase in the interest rate (we witnessed rate hikes into the 30% range on past due accounts). 4. The consumer faced with
two monthly payments, late charges, increased interest rate, and over the limit fees cannot make the payment necessary to bring the credit card account current, and a spiral begins. Collection efforts by the credit card banks intensifies and each month the delinquency continues, the credit score deteriorates along with any hope of qualifying for a consolidation loan, or a personal loan to bring the accounts in good standing. Eventually, the consumer seeks protection by filing but not until their credit rating is utterly destroyed. The filing of personal causes all accounts to be reported as discharged in bankruptcy, further sending the credit score downward.This is where re-listing comes in. Accounts included in do not have to include all the bad credit history prior to the discharge. The account should simply be listed as "discharged in bankruptcy". During the home loan application process, a home loan professional that has access to a re-listing service can submit the credit report and have the re-listed which removes all derogatory history from every account included in the (30, 60, 90 days late; charge off; collection). This is completed within 14-21 days.Records indicate that re-listing results in credit score increases between 50 and 180 points. The difference between the rates and terms of a home loan or mortgage refinance for a person with a 530 credit score (FICO score) and a 630 credit score is profound.Anyone that owns a home, or wants to buy a home, and has filed for in the last 5 years would be well served by checking into this option. www.iGlobalFinancial.com.
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