Most people who want to consult with a Las Vegas bankruptcy attorney about their credit scores are those who worry about their debts. This makes sense as the FICO credit score is based on five factors: payment history, capacity utilization, length of credit history, types of credit used, and recent credit searches. People who miss payments, use much of their available credit, are younger, use riskier types of credit, and ask for their credit scores are less likely to have good credit ratings. This makes sense in itself, but sometimes people who pay off their loans find out several years later that their credit scores are less than perfect. One would think paying off debts and living off incomes and savings would be good for credit, but sometimes people in these circumstances find out that having no debt costs them money, such as higher home, auto, or renters insurance premiums. What gives?
It’s counterintuitive, but having no debt means that risk assessors have no idea what kind of a credit risk you really are. It’s kind of like dividing a number by zero: the answer is undefined. These instaurations have no choice but to put the debtless into a lower category than those who have none. This means that for some maintaining a good credit score—even if it means taking on debt—is sometimes necessary to have lower payments. So much for “going off the grid.” If you find yourself in these circumstances, here are a few suggestions:
(1) It’s better to responsibly handle a small amount of debt than no debt at all, so running up charges will put you back on FICO’s radar. However, those who want to not actually go into debt for the sake of going into debt will have to be cleverer.
(2) Use a credit card for small purchases and pay the bills promptly. Rather than using it for gas or groceries, you can use a credit card for utilities. That way you never need to take it out of your home.
(3) Go to a credit union and see if you can set up an account and simultaneously take out a loan. The loan can be collateralized, and you can agree on a low interest rate. Then simply ensure that the loan automatically deducts the payments from your account at the credit union.
In all these cases, you will have to check up on the account to make sure it’s getting paid, but this should work while establishing that you’re very, very creditworthy.
If you do have many unmanageable debts, though, that’s when you need to talk to a Las Vegas bankruptcy lawyer. A Chapter 7 filing can help you discharge all your unsecured debt and give you the fresh start you deserve.
For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 702-880-5554 to set up your free consultation.