Problematic credit scores after bankruptcy

In the wake of the Great Recession, many Americans have found it exceedingly difficult to get back on their feet. Numerous people were laid off, while others took a pay cut, and all the while bills and other expenses increased. As such, declaring bankruptcy became more commonplace than in previous years. Though many financial experts advise against doing so at all costs, many Americans filed, often causing significant damage to their credit score.

But these are often the people who need extra help from lenders the most. So what are companies supposed to do? This sector of the population provides a lucrative demographic to do business with, but application requirements might have lenders turning away those with a bad score because of bankruptcy.

Employees can suggest that this type of applicant comes back after opening a new line of credit and following best practices with it, checking all errors to a credit report and other activities that are known to boost a score over time.

However, lenders also have another option: They can use the Payment Reporting Builds Credit (PRBC) score, which would likely result in more people qualifying to borrow. Though 35 percent of a person's traditional score is made up of payment history on utilities accounts, that is all that comprises a PRBC number. So when consumers have a positive history of paying off items like gas, electric and water bills, they will likely be in good standing to borrow.