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How Long Does it Take to Rebuild Credit After Bankruptcy?



Once your bankruptcy is discharged, you can start rebuilding your credit right away! A discharge means you successfully completed your bankruptcy, and you no longer need court permission to take on new debt – but that doesn’t mean you should take on a whole lot of debt all at once. Credit recovery after bankruptcy takes care and patience, and we’re here to give you some pointers.

How Bankruptcy Impacts Your Credit

How Long Does it Take to Rebuild Credit After Bankruptcy?Credit repair can be a long journey, but it may not be as long as you think. While bankruptcy can impact your credit score for a while, time heals your credit reports.

If you filed Chapter 13 bankruptcy, the good news is that your bankruptcy is only listed on your credit reports for up to seven years, starting from the date that you file. Since Chapter 13 typically lasts either three or five years, you only have two to four years of it being reported on your credit reports if everything goes well. Once it falls off, that’s it – no more negative impact from the bankruptcy on your credit score.

Chapter 7, though, can remain on your credit report for up to ten years starting from the date you file. This type of bankruptcy is much shorter, generally only lasting four to six months. It’s known as the liquidation bankruptcy and your assets are sold to repay your creditors, unlike in Chapter 13 where you work with your trustee to repay your debts. For this reason, Chapter 7 sticks around on your credit reports longer.

However, even if your bankruptcy is set to impact your credit reports for a few more years, it doesn’t mean that its impact stays the same during that time. Negative marks lose some of their potency with each passing year, including bankruptcy. It could take a few years for your credit score to fully recover from bankruptcy, but there are some tips we can offer to start you off in the right direction.

Credit Repair Tips for Bankruptcy Borrowers

Regardless of what bankruptcy chapter you went through, one of the better ways to go about credit repair afterward is by understanding what makes up your credit score and taking on new credit responsibly.

The first step in repairing your credit is knowing what goes into your credit score:

  • Payment history – 35%
  • Amounts owed – 30%
  • Length of credit history – 15%
  • Credit mix – 10%
  • New credit – 10%

This is what makes up your FICO credit score, the most commonly referenced model out there. Payment history is the big one to keep an eye on. By making all of your payments on time, you’re working toward a good credit score. However, you need to have reported credit if you want “credit” for those timely payments.

Accounts that usually report your timely payments to the credit bureaus automatically include:

  • Auto loans
  • Mortgages
  • Secured or unsecured credit cards
  • Credit-builder loans
  • Some personal loans

Other things like utilities and even streaming services can be reported, but typically require the help of credit reporting services. Many credit reporting services are free of charge, though. Some things that you may be able to get on your credit reports include:

  • Rent payments
  • Subscriptions services (like Netflix)
  • Water and/or electric bills
  • Cable bills
  • Phone bills
  • Insurance premiums

If you have a monthly expense that isn’t being reported and you want those timely payments to count toward your credit score, check out our trusted partner for more information.

However, while not every on-time payment you make has the potential to be reported, missed or late payments can be reported by creditors even if that account isn’t actively listed. If you’ve been paying your auto insurance premiums but miss a few payments and that account gets sent to collections, it can show up on your credit reports as a negative account. Even if something isn’t normally reported, it still has the potential to harm your credit if you don’t stay current.

How Much Credit Should I Get After Bankruptcy?

There’s no set amount of credit that’s recommended for everyone. Everyone’s situation is unique, and how much credit you should take on after bankruptcy depends on how much you can personally handle. It’s a good idea to take on some reasonable credit after bankruptcy to start a positive repayment history, increase your credit variety, and show future lenders that you’re able to be financially responsible post-bankruptcy.

By only taking on new credit when you need it, you’re more likely to successfully repay your loans and maintain a positive repayment history. It’s not advisable to immediately take on multiple credit cards or installment loans soon after a bankruptcy discharge. Those hard pulls from applying can hurt your credit for up to 12 months – usually around five to 20 points per pull.

However, having a few credit cards with manageable monthly payments and an installment loan or two that’s reported on your credit reports can boost your payment history and credit mix, improving your overall credit score. The key is moderation and balancing your credit with what you can realistically keep up with.

Installment loans like car loans can be a great way to build a payment history and prove your ability to repay credit responsibly (aka your creditworthiness). And there are auto lenders able to assist bankruptcy borrowers.

Bankruptcy Car Loans

Taking on new credit after bankruptcy can be a challenge. Since bankruptcy can wreak havoc on your credit score, you may struggle to meet the credit score requirements of traditional auto lenders. To get into an auto loan and start repairing your credit after bankruptcy, working with a special finance dealership may increase your chances of approval.

Special finance dealerships are signed up with subprime lenders. They specialize in assisting borrowers in many unique credit circumstances, such as a past bankruptcy. Instead of using just your credit score to determine your creditworthiness, they examine your income, overall financial stability, and credit reports as a whole to get a better idea of you as a borrower.

Getting approved for a subprime auto loan starts with finding a special finance dealership – and we want to help. At Auto Credit Express, we’ve created a nationwide network of dealers that are signed up with subprime lenders, and we want to help you find one near you. Get started right now by completing our free auto loan request form, and we’ll look for a dealership in your area that’s signed up with bankruptcy auto lenders.

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Are Sallie Mae Student Loans Federal or Private?



When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which time it has provided both federal and private student loans.

However, as of 2014, all of Sallie Mae’s student loans are private, and its federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one out.

What is Sallie Mae?

Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years.

In 1972, Congress first created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress gave SLMA, commonly called “Sallie Mae,” the status of a government-sponsored enterprise (GSE) to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.

However, in 2004, the structure and purpose of the company began to change. SLMA dissolved in late December of that year, and the SLM Corporation, or “Sallie Mae,” was formed in its place as a fully private-sector company without GSE status.

In 2014, the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae. Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. If you took out a student loan with Sallie Mae prior to 2014, there’s a chance that it was a federal student loan under the now-defunct Federal Family Education Loan Program (FFELP).

At present, Sallie Mae owns 1.4 percent of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.

What is the difference between private and federal student loans?

When you’re seeking financing to pay for college, you’ll have a big choice to make: federal versus private student loans. Both types of loans offer some benefits and drawbacks.

Federal student loans are educational loans that come from the U.S. government. Under the William D. Ford Federal Direct Loan Program, there are four types of federal student loans available to qualified borrowers.

With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.

On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums.

Private student loans are educational loans you can access from private lenders, such as banks, credit unions and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer has excellent credit, you may be able to secure a competitive interest rate as well.

As for drawbacks, private student loans don’t offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.

Are Sallie Mae loans better than federal student loans?

In general, federal loans are the best first choice for student borrowers. Federal student loans offer numerous benefits that private loans do not. You’ll generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan — Sallie Mae loans included.

However, private student loans, like those offered by Sallie Mae, do have their place. In some cases, federal student aid, grants, scholarships, work-study programs and savings might not be enough to cover educational expenses. In these situations, private student loans may provide you with another way to pay for college.

If you do need to take out private student loans, Sallie Mae is a lender worth considering. It offers loans for a variety of needs, including undergrad, MBA school, medical school, dental school and law school. Its loans also feature 100 percent coverage, so you can find funding for all of your certified school expenses.

With that said, it’s always best to compare a few lenders before committing. All lenders evaluate income and credit score differently, so it’s possible that another lender could give you lower interest rates or more favorable terms.

The bottom line

Sallie Mae may be a good choice if you’re in the market for private student loans and other financial products. Just be sure to do your research upfront, as you should before you take out any form of financing. Comparing multiple offers always gives you the best chance of saving money.

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Tips to do some fall cleaning on your finances



Wealth manager, Harry Abrahamsen, has five simple ways to stay on top of the big financial picture.

PORTLAND, Maine — Keeping track of our financial stability is something we can all do, whether we have IRAs or 401ks or just a checking account. Harry J. Abrahamsen is the Founder of Abrahamsen Financial Group. He works with clients to create and grow their own wealth. Abrahamsen shares five financial tips, starting with knowing what you have. 

1. Analyze Your Finances Quarterly or Biannually

You want to make sure that your long-term strategy is congruent with your short-term strategy. If the short-term is not working out, you may need to adjust what you are doing to make sure your outcome produces the desired results you are looking to accomplish. It is just like setting sail on a voyage across the Atlantic Ocean. You know where you want to go and plot your course, but there are many factors that need to be considered to actually get you across and across safely. Your finances behave the exact same way. Check your current situation and make sure you are taking into consideration all of the various wealth-eroding factors that can take you completely off course.

With interest rates very low, now might be a good time to consider refinancing student loans or mortgages, or consolidating credit card debt. However, do so only if you need to or if you can create a positive cash flow. To ensure that you are saving the most by doing so, you must look at current payments, excluding taxes and insurance costs. This way you can do an apples-to-apples comparison.

The most important things to look for when reviewing your credit report is accuracy. Make sure the reporting agencies are reporting things actuary. If it doesn’t appear to be reporting correct and accurate information, you should consult with a reputable credit repair company to help you fix the incorrect information.

4. Savings and Retirement Accounts

The most important thing to consider when reviewing your savings and retirement accounts is to make sure the strategies match your short-term and long-term investment objectives. All too often people end up making decisions one at a time, at different times in their lives, with different people, under different circumstances. Having a sound strategy in place will allow you to view your finances with a macro-economic lens vs a micro-economic view. Stay the course and adjust accordingly from a risk and tax standpoint.

RELATED: Financial lessons learned through the pandemic

A great tip for lowering utility bills or car insurance premiums: Simply ask! There may be things you are not aware of that could save you hundreds of dollars every month. You just need to call all of the companies that you do business with to find out about cost-cutting strategies. 

RELATED: Overcome your fear of finances

To learn more about Abrahamsen Financial, click here

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How to Get a Loan Even with Bad Credit



Sana pwedeng mabura ang bad credit history as quickly and easily as paying off your utility bills, ‘no? Unfortunately, it takes time. And bago mo pa maayos ang bad credit mo, more often than not, kailangan mo na namang mag-avail ng panibagong loan. 

Good thing you can still get a loan even with bad credit, kahit na medyo limited ang options. How do you get a loan if you have bad credit? Alamin sa short guide na ito. 

For more finance tips, visit Moneymax.



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