How bankruptcy affects credit score

Bankruptcy and credit

What happens to my credit score when I file bankruptcy?

No matter which bankruptcy you file for, it will show you how bankruptcy affects credit score.  That affect be for the good or the bad.  Whether it is a Chapter 7 bankruptcy or a Chapter 13 bankruptcy it will be how bankruptcy affects credit score.   We find many of our client actually improve their score by filing for bankruptcy.  Usually this is due in part to their score being so damaged by years of late or no pay being reported on their credit score.  Having a bankruptcy on a credit report can make your credit score take a dive, but with time this becomes less significant especially if you begin establishing good financial habits and new credit as soon as you are able to. If you have a low credit score because of not making payments, filing for a bankruptcy could actually be better than remaining in the current situation you are in. Being responsible and proactive about credit after a bankruptcy will help you get back to a good credit score within a few years.

Bankruptcy will stay on your credit report for up to 10 years. However, not filing for a bankruptcy and continuing to not pay your bills or credit card debts will also negatively impact your credit score. As the items on your credit report grow older and more time goes on, they will have less of an effect on your credit score.

In order to improve your credit after filing for bankruptcy there are a few things you can begin to do. You’ll want to check up on your credit score every now and again and make sure that everything is being reported correctly. You can start re-establishing credit as soon as you can. This is possible through setting up secured credit cards or taking out a car loan (because they are generally easier to take out than other types of loans). Do research on other credit card offers and check out interest rates, disclaimers, and fees carefully and these can help you reestablish credit. By using credit cards and rewards wisely and making timely payments, with time these can help you to have a better credit score.

 

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