How Long After Bankruptcy Will My Credit Score Improve?
Having a good credit score gives you an automatic boost in all your financial matters. Like a key, it unlocks lower interest rates, better premiums and more loan approvals. A good credit score gives you an upgrade, allowing you access to numerous savings and benefits. However, going bankrupt can snatch all of these perks right out of your hand. Bankruptcy will cause your credit score to plummet, but that doesn’t mean that your credit score can’t go back with a bit of hard work and diligence. While you can’t remove bankruptcy off your record, in approximately 12 to 8 months you can begin the process of restoring your credit score after the bankruptcy. If taking the right steps, in about a year your credit score can change from “bad” to “fair”. Going up to “good”, “very good” or “excellent” is also achievable, but it could take a longer time.
Bankruptcy Can Have a Greater Effect on High Credit Scores, More So Than on Lower Credit Scores
They say the higher you are the harder you’ll fall. The higher your credit score was before bankruptcy, the more your credit rating will be affected. While you are bound to lower your score regardless of your starting point, your score will not change dramatically if your credit score was already considered bad.
How Will Bankruptcy Affect My Credit Score?
After filing for bankruptcy, you may face troubles such as:
- Obtaining a car loan
- Purchasing or renting a house or apartment.
- Getting reasonable interest rates when it comes to financing
- Your unsecured credits cards getting lower credit limits.
- Getting higher penalties for any late payments
- Using your credit for anything other than necessities.
- Receiving large deposits of cash.
- Obtaining loans with no qualified co-signer.
- Making additions of authorized users to credit cards.
- Making and returning safety deposits.
While these are all issues that you are bound to run into at some point, help is always around the corner. Professional help can assist you with starting fresh by showing you how to tackle these issues.
Once Filing For Bankruptcy, What If I Need a Loan or Credit Card?
Right after your bankruptcy is probably when you are feeling the most vulnerable. However, not all is lost. There are many mortgage companies that provide loans for bad credit scores ranging from 560-600. To qualify for traditional financing, you must have a credit score of at least 600. After filing for bankruptcy, if you need to buy high-cost necessities, you can apply for secured credit cards and loans. There are also available credit builder loans which are specially designated for bankrupt individuals.
A Good Credit Post-Bankruptcy
Bankruptcy will stay on your report for either seven or ten years depending on the type of bankruptcy you filed for. Chapter 13 bankruptcy stays on your credit report for 7 years and Chapter 7 bankruptcy stays for 10 years after final discharge. Final discharge means that you are released from personal liability. Bankruptcy could stay on your record for 7-10 years, but your credit score recovery does not necessarily have to take as long. It also does not mean it will take you this long to get out of debt.
How Do I Rebuild my Credit Post-Bankruptcy?
While bankruptcy will appear on your record for 7 to 10 years, it will affect you less if you start to work on improving your score every. You can start rebuilding your credit thirty days after receiving your final discharge.
Rebuilding your credit score takes steps, such as:
- Requesting 3 free credit reports to ensure a balance of zero. According to federal law, you are entitled to these reports.
- If the accounts do not show a zero balance, you can utilize the credit repair dispute process.
- Pay all your student loans and other debts early and/or on time.
- If possible, obtain a secured credit card to use for small purchases.
- Pay off your remaining credit cards (if you have any) and try not to open more than one new credit card every six months.
- Start working on obtaining a car loan or any another type of large loan.
Follow these steps and you will slowly but surely see your credit score improve.
What if My Bankruptcy Information is Wrong?
If your record shows and incorrect financial information, you should speak to an attorney to assist with credit repair. Attorneys will be able to communicate with credit reporting agencies, credit card companies and issuers on your behalf. They can also take the reins if a company does not correctly get rid of your debt.