Check your credit reports and your credit score

Step 1: Check your credit reports and your credit score

Yes, this will likely be an unpleasant moment. You will see that your credit score has been reduced by as much as 200 points or more. If you are able to see the positive side, you will get to see the gradual improvement in your score in the foreseeable future.

A 750 credit score is the goal. It is attainable. You must constantly remind yourself of your goal. As many clients have said to me, "My score is at rock bottom, so the only direction it can go is up!"

Request a credit report from each of three agencies -- Experian, Equifax and Trans Union -- at AnnualCreditReport.com. You must work to clean up your report with all bureaus. Even though Experian is the most commonly used credit report, you ought to make sure all three are as clean as possible.

Once you order your free credit report, you'll be given an option to purchase your credit score from the bureau or bureaus. You can also buy it at MyFICO.com.

Step 2: Update any erroneous personal information

Even basic information needs to be updated. Make sure you have your residential history accurate and current. It is hoped you can show that you have been living in the same place for numerous years. Rental stability is important.

Include your employment history as well. Creditors like applicants with stable employment.

These first few basic steps may help improve what future creditors think about your credit request.

Step 3: All accounts must show 'Discharged in Bankruptcy'

You don't want previous delinquent accounts to show continuous, post-discharge delinquencies. The last delinquent payment should be the month after you filed your case. All lines on your credit report should say "Discharged in Bankruptcy" or "Included in Bankruptcy" and show a zero balance.

Step 4: Remove any erroneous information you can from your report

Make sure all the accounts on your credit report are actually yours. Dispute accounts that you do not recognize and legitimately believe should not be on your report.

Many people have told me about companies that help you remove legitimate items from your credit report. Meaning, you can remove a negative mark from your credit report based on a technicality. Unfortunately, I have also been told by just as many people that the mark resurfaces after it has been removed. The credit bureau will initially remove the account because of your request, but the creditor simply re-posts the negative account. The account is or was delinquent, and it is more likely than not that the creditor will send that information to the credit bureaus again.

Step 5: Credit report inquiries

Make sure you recognize all creditors that have made inquiries to review your credit report. Many creditors included in your bankruptcy will already have reviewed your credit because you were delinquent on the account before you filed. These are legitimate. But you want to remove any creditor inquiries that you did not authorize or that were not from one of your original creditors.

Collection agencies will review your credit report when they purchase the account from the original creditor. This is a valid inquiry.

Step 6: Know when items can be removed

Items can only remain on your credit report for a specific period of time. You can notify the credit bureaus to remove items once their time has passed. In general, an account can only remain on your credit report for seven years from the date of last activity. Last activity specifically means the date of last purchase or last payment. This could be a while for some accounts, but you want to know the exact date so that you can get it off the report as soon as it can be removed.

Step 7: Make sure any new collection accounts that appear after filing are accurate

When a creditor decides you are not going to pay them, it writes off the account. That usually means that the account is sold to a collection agency that will attempt to collect payments. Many times, these agencies do not receive your bankruptcy information from the original creditor. The collection agency will post a new collection account to your credit report even though you have filed bankruptcy and have eliminated that debt.

You need to make sure that the date of that new account reflects the dates from the original debt owed and not from the date it was posted to your account. If the original credit loan was from 2007 and this new collection account posts to your credit report in 2010, you want it to reflect the date the account was opened as 2007, not 2010. That way the account comes off your credit report after seven years from the original date and not from the date it was posted to your report.

These are the first steps to take before you start applying for credit. Make the report as clean as possible. At least you will know that there are no errors that are impacting your credit score more than necessary.