How a Bankruptcy Affects Your Credit Score
If you are considering filing for bankruptcy, the last thing you may be worried about is your credit score. With overwhelming debt, you may not be in the market to purchase a new home, car, or other major purchase. However, it is important to understand how a bankruptcy will affect your credit score, as the process to financially heal after declaring bankruptcy can take several years.
Bankruptcies and Credit Reports
You can obtain your credit report from three different agencies. While each of them may have slightly different financial indicators, most of the information will be similar. These credit reports demonstrate a person’s financial health, and the information is compiled to create a single credit score. This number can rise and fall and is dependent on financial circumstances such as length of credit, amount of debt, late payments and bankruptcies. It is important to note that any damage that is done to a credit score can eventually be healed, and any credit score can rise over time.
Your bankruptcy will be listed in the public reports section of a credit report. Chapter 7 bankruptcies are typically reported for ten years from the filing date, and Chapter 13 bankruptcies are typically reported for seven years from a bankruptcy filing date. However, you will not need to wait for a full 7 to 10 years for your credit score to rise after a bankruptcy.
Rebuilding Your Credit Score After a Bankruptcy
Bankruptcy will negatively affect your credit score. However, bankruptcies offer a financial fresh start to those that declare and can alleviate financial stress and debt that is overwhelming. After a bankruptcy, attempt to follow these steps to rebuild your credit score faster.
- Ensure Accuracy. Obtain a copy of your personal credit report from all three credit reporting agencies. You are allowed to receive one free report every year. Make sure that your bankruptcy is listed correctly, and that all of your debtors and creditors are shown as paid, discharged, or included in your bankruptcy. If you find any errors, attempt to contact the credit reporting agency to fix them as soon as possible.
- Apply For A Secured Credit Card. Secured credit cards allow a person to pre-pay a certain amount that can be used to purchase items. This secured credit card can attempt to rebuild your credit score.
- Regularly Check Your Credit Reports. While you should check your credit report yearly, you should consider investing in a program or service that allows you to freely monitor your credit reports. This will ensure the accuracy of your reports as well as show how your credit score is increasing over time.
Contact an Experienced Bankruptcy Attorney Today
If you are planning on filing for bankruptcy, the legal process can be complex and challenging. Filing for either Chapter 7 or Chapter 13 bankruptcy can affect your future credit in many ways. Consider visiting with Lehighton & Carbon County bankruptcy attorney Adam Weaver who can help you explore all of your bankruptcy options, and help you with the best tactics to ensure a fresh start after bankruptcy. Call 570-818-4888 or contact our office online for a consultation.