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Can You Get a Loan After Bankruptcy?

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When you’re going through bankruptcy, applying for a loan might be the furthest thing from your mind. The process leaves…

When you’re going through bankruptcy, applying for a loan might be the furthest thing from your mind. The process leaves your credit in tatters — but that can change in a few years’ time if you make a consistent effort.

“People can absolutely recover from bankruptcy,” says Jordan van Rijn, senior economist at the Credit Union National Association. “It just takes time and quite a bit of patience.”

If you’re considering loans after bankruptcy, expect to wait at least a year or two before qualifying for traditional loans. But don’t count out other options. Here’s what you need to know.

What Is Bankruptcy?

Bankruptcy relieves most, if not all, of your debts but comes with a price: a damaged credit record and lower credit scores.

Two of the most common types of personal bankruptcy are Chapter 7 and Chapter 13.

In Chapter 13 bankruptcy, you can keep assets like a house or a car as long as you have a reliable income. You can get court approval for a repayment plan over three to five years, after which your debts will be discharged.

In contrast, Chapter 7 requires you to liquidate all eligible assets, although some items — such as cars and furnishings — could be exempt. And your income cannot exceed an amount designated by the government.

How Does Bankruptcy Affect Your Credit?

Bankruptcy will dramatically affect your credit score, and it will remain on your report for seven to 10 years, says Rod Griffin, senior director of consumer education and advocacy at Experian.

Discharging debt can help you start anew, but it doesn’t wash away the months or years of financial issues, such as missed loan payments and out-of-control balances. Those marks on your credit report will hurt your credit score for quite a while.

[Read: Best Bad Credit Loans.]

“After a Chapter 7 discharge, your credit scores will not necessarily bounce back. Although the accounts discharged in bankruptcy will no longer show a balance owed, they will still remain on your credit report,” Griffin says. “The status will show they were discharged in bankruptcy, and any late payments that occurred prior to when the bankruptcy was filed will also remain on your report for up to seven years.”

How Can You Raise Your Credit Score After Bankruptcy?

The most important task after bankruptcy is to repair your credit, which will eventually help you get approved for credit cards and loans again.

“The key to rebuilding your credit score is to have an open, active account with a history of on-time payments,” Griffin says.

Some consumers are able to keep an account or two when going through bankruptcy, which is called reaffirming the debt, Griffin says. “If this is the case, make sure every payment is made on time going forward so that you can show lenders you are managing the account responsibly,” he says.

A good way to start your road to credit recovery is to apply for a credit-builder loan. These are short-term loans that range from about $200 to $1,000 and are not used as an investment or to purchase anything in particular, van Rijn says. You can usually find them at credit unions or community banks.

Griffin suggests other ways you can build your credit score after bankruptcy:

— Apply for a secured credit card, a card with a credit line of usually less than $1,000 that is backed by your own money. Work with a bank or credit union where you already have a checking or savings account. If you make your payments on time for a while, you’ll likely move up to an unsecured card.

— Become an authorized user on an account. This could improve your credit score if the account is in good standing.

— Get a co-signer for a credit card or loan.

— Use a tool like Experian Boost or UltraFICO, which factors alternative data into your credit report by monitoring things like rent and utility payments. However, lenders might not use this data for your loan application.

How Long Does It Take to Get a Loan After Filing Bankruptcy?

For some loans, you’ll need to wait at least two years after bankruptcy before applying. You want to have a positive credit record and plenty of time between your loan application and bankruptcy.

[Read: Best Personal Loans.]

“It may be difficult to qualify for a loan after filing Chapter 7, especially if the bankruptcy was recent,” Griffin says. Whether you qualify will likely depend on several factors, such as:

— How long ago you filed for bankruptcy.

— Whether you have established a positive account history since your bankruptcy.

— The type of loan you are applying for.

“If you qualify, you will almost certainly have to pay higher interest rates and other fees, especially if your bankruptcy was recent,” says Griffin.

For example, if your credit score is still fair or very poor — which is considered under 670 on FICO — expect to pay a higher interest rate than someone with a higher score.

Here is a look at ways to get approved for common loans:

Unsecured loans: Credit cards and personal loans are types of unsecured loans. Soon after bankruptcy, you’re more likely to qualify for credit cards with high interest rates and low maximum balances (up to about $2,000) than for something like a $10,000 personal loan, van Rijn says.

Mortgages: It will likely take a few years to get your credit score high enough to be considered for a conventional mortgage with a reasonable interest rate.

The easiest way to qualify is likely with a government-backed loan with lower requirements for credit scores.

If you file Chapter 7 bankruptcy, you’ll wait at least two years after your loan discharge before you can apply for loans from the Federal Housing Administration or Department of Veterans Affairs. However, if you file for Chapter 13, your waiting period could be just one year after the start of your bankruptcy payout period for FHA and a year from your Chapter 13 filing date for VA.

Other types of mortgages you might qualify for may be less appealing, with high interest rates and balloon payments.

[Read: Best FHA Loans.]

“It may take some time before you can qualify for a mortgage or other large loan with a lower interest rate and more favorable terms, but try not to get discouraged,” Griffin says. “As long as you practice good spending and payment habits as you rebuild, in time your credit scores will begin to reflect that.

Beware Loan and Credit Scams

When you’ve been struggling for years to bring up your credit score, you may be tempted to look for shortcuts. But that’s exactly what unscrupulous companies are looking for when they trick you with loan and credit-building scams.

For example:

— Advance fee loans, in which you are guaranteed approval if you provide $100 or more, might be illegal. The Federal Trade Commission prevents anyone who guarantees that you will obtain a loan from asking for payment beforehand. Legitimate lenders will ask that you go through a loan approval process but will not guarantee acceptance upfront.

— Credit repair companies might make promises they can’t keep — such as removing accurate negative information from your credit report — and ask for upfront money. Know that you can take most credit improvement steps on your own, for free.

While recovering from bankruptcy, you may need to make major changes in how you spend and deal with debt while also planning for the future. It might be difficult to balance your post-bankruptcy recovery with a loan until you’re truly ready to handle that responsibility.

“Keep in mind, the point of bankruptcy is to reset your personal finances,” Griffin says. “If you are in a rush to take on more debt, you’ve missed the point.”

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What Is Identity Theft? | Credit.com

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Identity theft is a major problem. According to the Federal Trade Commission (FTC), there were more than 650,000 victims of identity theft in 2019, making ID theft the most-reported type of FTC complaint.  Chances are good that you will encounter identity theft in your lifetime. That was the case for at least 1 in 10 Americans ages 16 and older in 2016, according to the most recent data from the Bureau of Justice Statistics.

Protecting your identity and privacy should be a priority for you, and knowing what identity theft is can help you prepare. There are many different types of ID theft, which can make safeguarding your personal information even more important—and more difficult. Let’s look at some of the most common examples of identity theft and what you can do to manage the risks.

Defining Identity Theft

The term “identity theft” is used a lot, often interchangeably with “fraud.” Though many instances of identity theft are committed for fraudulent reasons, the two are slightly different. If you are a victim of identity theft, you want to catch it before it becomes fraud.

According to the National Center for Victims of Crime (NCVC), identity theft is “the knowing transfer or use, without lawful authority, of another person’s identity with the intent to commit, aid, or abet unlawful activity.” In simpler terms, ID theft is the act of stealing another person’s information, like through mail theft, phishing, card skimming, unsecure Wi-Fi or a data breach. Fraud is when a criminal illegally uses that information for their own gain.

The NCVC calls the latter “identity fraud,” which encompasses crimes like credit card fraud, medical fraud, and Social Security number theft. Identity fraud can be financially driven, but is also committed out of other motivations. Someone might try to steal your passport or driver’s license information to travel unnoticed by law enforcement, for example.

Whether an ID thief uses your credit card or medical insurance, the cost to you can be big. Javelin Research found that the 2018 out-of-pocket costs for victims of identity theft were $1.7 billion.

Different Types of Identity Fraud

As a popular saying goes, “Know your enemy.” Let’s take a closer look at identity fraud types and preventative measures you can take to prepare yourself and protect your finances.

1. Credit Cards

Credit card fraud is by far the most prevalent type of identity theft, according to FTC numbers.

You probably store your credit card information with different vendors or subscription services. If you used your card once at a retail store, they’ll still have your information on file. If a data breach occurs at one of those businesses, someone may gain access to your credit card number and begin to make fraudulent purchases.

While it may be easier to catch a fraudulent charge on a card you have, it could be harder to spot a new account in your name. In the meantime, hard inquiries and high credit utilization due to fraud could wreck your credit score.

ExtraCredit, Reward Smart Financial Decisions. Learn More

What you can do: Requesting a chargeback might help you avoid paying for specific fraudulent transactions, but checking your credit report will show you if the problem is deeper. Sign up for ExtraCredit to keep an eye on your credit report and scores at the same time to make sure that fraudulent accounts aren’t being opened or used. You can also request your free credit report from each of the three credit reporting agencies once a year to keep close control over your identity and credit profile. If you notice anything fishy, request a freeze immediately and file a report with the FTC.

Note: Due to the COVID-19 coronavirus pandemic, you can currently review your credit reports from each of the three credit bureaus for free each week, through April 2021.

2. Loans and Leases

Somebody with your personal information might try to apply for a loan online. Fraudsters may then be able to get financing to buy a car or real estate. The FTC has also reported fraud instances related to student loans and payday loans.

Loan application fraud is a challenge to track, but the impact is someone racking up debt in your name. When creditors come calling, it won’t be the thief who has to answer the phone.

What you can do: As with credit card fraud, regularly check your credit reports to watch for red flags. If you spot something, immediately contact the responsible financial institution. You may also want to file a police report or contact the office of the attorney general for your state. If you are the victim of loan/lease fraud, consider using credit repair services to help you recover.

3. Phones and Utilities

Mobile takeover fraud is a complicated scheme, but it’s a growing problem. Basically, it involves a fraudster using your information to access your smartphone and then lock you out. In the meantime, they can use your apps, read saved documents, or scam others by impersonating you. They might also harvest your personal and financial information that you have saved. The same might happen for an electricity or water account: A criminal finds a way in and consumes services that are ultimately billed to you.

The common theme with identity theft here is that if someone has your info, they can do just about anything with it. This includes opening up utility accounts in your name, getting free electricity, gas, water, internet or cable.

What you can do: Maintain strong passwords for all the accounts you have. If you need to, use a password manager to help you keep track of all the complex log-in credentials. Never, ever make your passwords using personally identifiable information, like a pet, birthdate, or home street. Should something happen, immediately contact your service provider.

4. Tax Fraud

Come tax time, a refund is a happy surprise for some Americans. Others may get a nasty shock when they’ve learned someone has claimed their return before they even file their taxes. Tax fraud typically occurs when someone has stolen your Social Security number, which they can then manipulate to falsely file a return and claim your refund.

What you can do: Under no circumstances should you give your SSN to anybody but trusted entities like the government, your bank, or your credit card company. Be wary of scammers posing as the IRS who will call or email you demanding your SSN information. This is a surefire sign of fraud. You can also opt to file your taxes early, thereby eliminating the opportunity for thieves to file for you and claim your return.

The IRS recommends watching out for various scams. If you believe you’ve been a victim, file a report on IdentityTheft.gov, call the IRS at 1-800-908-4490, and complete and submit the identity theft Affidavit.

Taking the Next Steps to Protect Your Identity

Identity theft is a constant threat, so you’ll always need to be on your toes.

Guard It from ExtraCredit provides you with proactive alerts, dark web monitoring, account monitoring, and $1 million in ID theft insurance.  Sign up today or read more articles about identity theft and fraud.

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China to take steps to improve bad faith deterrent mechanism_英语频道_央视网(cctv.com)

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BEIJING, Nov. 26 — China will adopt policy steps to optimize the mechanism for deterring acts of bad faith and refine the social credit system to underpin the development of the socialist market economy, the State Council’s executive meeting chaired by Premier Li Keqiang decided on Wednesday.

“In recent years, China’s social credit system has continued to develop. A market economy relies on credit, and a credit-based economy must follow the rule of law. Work in this regard shall be effectively carried out pursuant to laws and regulations,” Li said.

Those at the Wednesday meeting decided on measures to refine the bad-faith deterrent mechanism to promote the orderly and healthy development of the social credit system. The principles include adhering to laws and regulations, protecting rights and interests, taking a prudent and appropriate approach and implementing list-based management.

The scope and procedures of credit information shall be formulated in a science-based way. Including certain behaviors in public credit information will require strictly following laws and regulations and a catalog management approach. Such information will be made accessible to the public.

Administrative departments must determine acts of bad faith on the basis of legally binding documents. The scope and procedures for sharing credit information shall be standardized. The principle of legality and necessity shall be observed when deciding whether and to what extent credit information is shared and disclosed. Such decisions shall be made clear when compiling the credit information catalog.

The meeting underlined the need to strengthen information security and privacy protection. Access to and procedures for credit information inquiries shall be strictly enforced. Leaking, tampering, damaging or stealing credit information or utilizing credit information for personal gains will be seriously investigated and dealt with. Illegal collection and transaction of credit information will be strictly cracked down on.

“In the development of the social credit system, it is important to pay attention to protecting personal privacy and trade secrets. Credit reference shall be conducted in accordance with law, with science-based scope and definition and appropriate penalties. Information must be used in a safe and secure manner,” Li said.

Identification of list of entities with serious acts of bad faith will be better regulated. The list shall be limited to those who put public health and safety in grave jeopardy, seriously sabotage the fair market competition order or disrupt normal social order. The list shall not be willfully expanded without authorization.

Punishment against bad-faith acts shall be enforced in accordance with laws and regulations, to make sure that penalties are meted out commensurate with dishonest behaviors. Disciplinary measures taken against entities with serious dishonest behaviors that reduce their rights or increase their duties shall be based on facts of bad faith and on laws and regulations. Punishments should be appropriate and not be added or increased at will. Financial institutions, credit service agencies, industry associations, chambers of commerce and news media should not be forced to punish entities with serious acts of bad faith.

A credit repair mechanism, which is conducive to self-correction, will be established. Entities will be allowed to fix negative credit records, unless otherwise stipulated by laws and regulations, should they correct dishonest behaviors and eliminate adverse impact. Relevant departments shall remove entities, who meet credit repair eligibility, from the list in a timely manner.

All localities and relevant departments shall promptly overhaul measures that have been rolled out for the determination, recording, disclosure and punishment of bad-faith acts, and those that do not meet the requirements shall be regulated in a timely manner.

The meeting also decided on measures to advance high-quality development of the credit reference sector. Cross-sectoral and cross-regional connectivity of credit information involving finance, government affairs, and public services will be promoted as provided by law. Disclosure and orderly utilization of data in government departments will be promoted in faster pace.

Market access of individual credit reference agencies will be promoted in an active yet prudent manner, and openness of the credit reference sector will be scaled up. Matching regulations and supporting institutions for the credit reference sector shall be improved and accountability mechanism strengthened. Fraudulent credit rating shall be strictly punished according to law. 

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Credit Repair Service Earns Best-in-Class Rating from TopConsumerReviews.com

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This service is the obvious choice for anyone needing credit repair, and we’re pleased to give Sky Blue our top ranking in 2020.

TopConsumerReviews.com recently affirmed the top-ranked status of Sky Blue Credit Repair, an industry leader among providers of Credit Repair services.

After decades of a devil-may-care approach to credit, the American public seems to finally understand the importance of a good credit score. The better one’s credit, the easier it is to be approved to rent an apartment or buy a home, secure an auto loan, or even get funding for higher education. What happens when a person realizes this after making some poor financial choices? Is it too late?

The good news is that one’s credit history can be repaired, resulting in the resolution of outstanding issues and a higher credit score. Some consumers find it challenging to navigate the process of negotiating with creditors, removing negative reports from their credit history, and consolidating debt. Fortunately, there are reputable credit repair services that take out all the guesswork, putting their decades of expertise into practice to help clients improve their credit histories step-by-step and often doing all of the work on their behalf. The best services take it a step further, working with their customers to help them develop a plan for continued financial stability going forward.

“For over 30 years, Sky Blue has helped clients throughout the United States to achieve a healthy credit history,” affirmed Brian Dolezal of TopConsumerReviews.com, LLC. “Although it can feel daunting to work on improving your credit score, you can count on the Sky Blue experience to be ‘happy and stress-free’ just as they promise. Your initial consultation and review with a representative is absolutely free, and you won’t be pushed into signing up for any services that aren’t a good fit for your situation. If you choose to become a Sky Blue client, your rep will get right to work, disputing at least 5 items with each credit bureau every 35 days. You can rest assured that your decision to use this service is no-risk because of their condition-free guarantee: in the first 90 days of your paid membership, you can get a full refund for any reason. Sky Blue also allows you to pause your service at any time. Plus, clients continue to compliment Sky Blue for being effective, honest, and affordable. This service is the obvious choice for anyone needing credit repair, and we’re pleased to give Sky Blue our top ranking in 2020.”

To find out more about Sky Blue and other Credit Repair services, including reviews and comparison rankings, please visit the Credit Repair Services category of TopConsumerReviews.com at https://www.topconsumerreviews.com/credit-repair.

About Sky Blue

Sky Blue Credit is dedicated to credit repair, focusing solely on helping customers reach their credit goals through repair and restoration services since 1989. They pride themselves on speed, disputing 15 items every 35 days, as well as giving intelligent guidance with respect to optimizing customers’ credit scores.

About TopConsumerReviews.com

TopConsumerReviews.com is a leading provider of reviews and rankings for thousands of consumer products and services. From Credit Repair to Debt Relief and Personal Loans, TopConsumerReviews.com delivers in-depth product evaluations in order to make purchasing decisions easier.

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