Have you ever applied for a rental or mortgage application? Have you tried to get a low interest rate on a vehicle or insurance for that vehicle? How about applied for a new job? There is one thing that can affect all of these major life events: your credit score. We’ve all felt the impact that credit scores have on our daily lives. The extent to which American consumers rely on credit is steadily increasing – a 2015 study from the Federal Reserve Board even stated that a good credit score makes you a better partner! As today’s consumers battle with higher interest rates and a never-ending cycle of debt, a poor credit score can be as detrimental to your overall credit profile as not brushing your teeth can be to your oral health – the longer you ignore the problem, the worse it gets.
Let’s look at an example: Say Jack wants to borrow $150,000 for a fixed-rate 15-year mortgage on a house in Arizona. If he has a credit score of 760 or higher, he may get a loan with an interest rate of 2.6% APR. That’s a monthly payment of $1,012. Compare that to Jill who has a credit score of around 620. Her interest rate will be more along the lines of 4.2%, with payments of $1,129 per month. According to myFico.com, that’s a difference of $117 a month, and a whopping difference of $21,046 in total interest paid! With this in mind, can you really afford not to rebuild your credit score?
The good news is that if you find yourself in that endless cycle of debt, a bankruptcy can eliminate your debt and help your credit score! It is a common misconception that bankruptcy has a long-lasting negative impact on a consumer’s credit score. When a consumer is already struggling with credit card debt, medical bills, repossessions, foreclosures, etc., their credit score is already likely to be low. For this type of consumer, their credit score would see a slight drop after a bankruptcy filing, but once their unsecured debt has been discharged in bankruptcy, they will find themselves able to rebuild their credit score free from overhanging debt.
When given a fresh start and a clean slate, consumers often find themselves able to make repayments on time and their debt-to-income ratio will decrease. While it is true that a bankruptcy appears on a credit report for 7-10 years after filing, it has a lesser negative effect than consistent and continuous late repayments and increasing interest rates.
Clients who hire Shawn Stone Phoenix Bankruptcy can find themselves reaching a 720 credit score within 12-24 months from filing a bankruptcy using a tailor-made program available to clients who want to start getting back on their feet after receiving their bankruptcy discharge.
Taking that first step to a fresh start and better credit score by consulting with a bankruptcy attorney can be a difficult and stressful decision, but if you are anticipating the need for a good credit score in the near future, it just might be the answer you are looking for. Don’t wait until your credit score hits rock bottom; contact Shawn Stone Bankruptcy Attorney today and let us help you increase your credit score!