How to Fix your Credit after an Emergency

Serious financial problems can strike an individual or family at any time, and if they have an emergency such as huge medical bills, loss of employment or if they need to file for bankruptcy, it can lower their credit score.

not a quick process

However, once this happens, it is possible to fix your credit, but it is not a quick process. A credit report is developed over years and gives a long-term picture of the spending habits as well as the repayment habits of the individual.


It is a fallacy to think that a poor credit score will remain forever. As time passes, past credit problems impact the score less and less. When a lender requests information about a person’s credit score, the lender receives the current score, so it is worth taking the time to fix your credit score.

FICO score is the measure of credit risk for a person. Each of the major credit reporting agencies Experian, Equifax, TransUnion will give one free copy of the credit report per year to an individual. These agencies are compliant with the Fair Credit Reporting Act (FCRA).

Credit Report

Once the consumer has a copy of his or her credit report, they should check for inaccuracies. Even if a major life emergency has lowered the score, inaccuracies can lower it even more and should be corrected.


Writing a debt forgiveness letter

If the consumer has filed for bankruptcy, they need to make sure their credit report accurately reflects the bankruptcy. If it is not properly listed, the report could show an outstanding, delinquent balance, which is worse.

When the account balance is discharged through bankruptcy, the credit report should show a $0 balance for that account. 

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If this isn’t shown properly, the consumer should send a dispute letter to each of the three credit bureaus and get the credit report updated or corrected.

rebuilding credit

One of the most critical steps to rebuilding credit is to get new credit and make payments on-time. Payment history is 35 percent of the credit score. 

It may not be easy, but the consumer should look for credit card applications that will be approved for people with a history of bankruptcy.


If the consumer can’t get one of these cards, they can consider a secured credit card. With a secured card, the consumer must make a security deposit.

However, if the payments are made regularly on-time, the card issuer will probably convert the card to an unsecured one after a year. In any case, a consumer with a history of bankruptcy will pay a higher rate of interest.

The credit limit on a secured credit card is calculated by subtracting the annual fee from the amount of the deposit. If the consumer deposits $500 and the fee is $40, the credit limit is $460.

Make Small Purchases

It is recommended that the consumer make small purchases and pay them off each month. If they use 10 – 15 percent of their credit line each month, they will begin to rebuild their credit score.

When selecting a secured card, the consumer should make sure the one they chose reports to all three major credit bureaus. This will maximize credit rebuilding.

After the consumer has made payments for several months on a secured care, they may qualify for a retail card from a department store. These have more lenient credit requirements and are often given to consumers who have a history of bankruptcy.

They have higher interest rates than other cards, and the balance should be paid in full each month. To get positive information on their credit report, the consumer should make several small purchases each month and make on-time payments.

Credit Rating Will Improve

The credit rating will improve when the consumer has a 30 percent debt-to-credit ratio or lower. For example, the consumer may have a $500 credit limit but only uses $75 and pays it off each month.

However, this only works if the credit card company reports the full payment to the credit bureau. Some credit card companies report the balance and not the payment. 

The consumer can keep their debt-to-credit ratio low by making several payments throughout the month, if the credit card company allows.

As the consumer pays off debt, it will be recorded on their credit score. This can raise the score and should not be removed. 

Some consumers think it’s a good idea to remove debt from their report to raise their score, but this is not the case. A history of regular repayments on any debt will only help raise the credit score.

It is not recommended to waste time and money trying to get bankruptcy removed from a credit report through a credit repair company. 

It is illegal to do this, and, even if they are successful, it will cause more problems in the future. If the bankruptcy is accurate, there is no point in disputing it on the credit report.

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