Keeping Score of Your Credit After Filing for Bankruptcy

Filing for bankruptcy can impact your credit score, but it doesn’t mean you’re out of options.

Knowing the differences between your credit score and credit report — as well as the different types of bankruptcy filings available — is key to understanding how to improve your credit score after you’ve filed.

Let’s dive in…

Credit Scores vs. Credit Reports

A credit score is a numerical representation of an individual’s “creditworthiness” — or the likelihood that they will effectively pay back their debts — which is determined by their past and present credit activity.

According to the Consumer Financial Protection Bureau (CFPB), “Your credit scores are calculated based on the information in your credit report.”

A credit report, on the other hand, is a comprehensive document that contains information about an individual’s credit history.

This report includes details such as…

• Open and closed accounts
• Payment history
• Bankruptcies
• Loans
• And more

Counting Down to Credit Health

Most people know that filing for bankruptcy will impact your credit —  but for how long, exactly?

A bankruptcy will remain on your credit report for up to 10 years in the case of Chapter 7, or up to 7 years in the case of Chapter 13. Note, however, that this is specific to various credit bureaus.

Credit scores are different in that they can be built back quicker depending on how you handle your finances following your bankruptcy filing. Additionally, the higher your credit score, the more likely you are to be offered lower interest rates when borrowing in the future. A bankruptcy generally can impact a credit score from one to three years, with most people seeing a great improvement within the first year. In fact, most credit scores will improve faster because of the bankruptcy filing because the debt ratio has decreased and the negative reporting on late payments or nonpayment has stopped. Thus, giving the bankruptcy filer a leg up on repairing their credit faster than the non-filer who will continue to have negative reporting month after month and year after year.

Even so, it is important to note that having a bankruptcy on your credit report does not mean you cannot get any type of loan. The key to rebuilding your credit score is consistent and timely payments on any debts or loans that you do have.

Building Back After Bankruptcy

The bottom line is that bankruptcy doesn’t have to be as intimidating as many people initially believe. With the right strategy and resources, you can increase your credit score regardless of which chapter you file for, thereby diving into financial renewal sooner than you think!

What’s more, you don’t have to navigate the bankruptcy filing process alone.

When you work with Dolaghan Law, you’ll find the guidance you need to move forward and through the process with confidence. So, are you ready to learn more or start filing?

If so, contact Dolaghan Law today by calling 904-354-493! With Dolaghan Law, you’re not alone.