Filing for bankruptcy is often looked at as a last resort for people who are in financial trouble. When someone goes down this road, the first thing that comes to mind is their credit score and how it will be affected. But does bankruptcy destroy your credit? If so, for how long? In this blog post, we’ll discuss how bankruptcy affects your credit score and how to rebuild it after filing.
How Does Bankruptcy Impact Your Credit Score?
Most people who file for bankruptcy already have a low credit score, and bankruptcy will only affect their credit at one point – when the case is filed. It will remain on their credit report for up to seven years, but it won’t negatively impact the credit score for the full seven years. Think of filing for bankruptcy as getting a bad grade on an exam – it hurts initially, but it’s not the end. Going forward after the bankruptcy, you can only get A’s.
What You Can Do to Improve Your Credit Score
One thing that can improve your credit score after filing is getting a small credit card and paying it off monthly. As long as you pay off your balance every month, you’ll avoid any interest. Another way to rebuild your credit score is to keep up with house or car payments. Regularly making these payments after filing for bankruptcy can improve your credit score quickly and drastically.
It’s important to note that some lending or financial institutions may view a bankruptcy filing as a risk. However, you can still rebuild your credit score. Remember, bankruptcy will only destroy your credit for a while, and you can still get a loan or obtain credit cards after filing.
Why You Should Consider a Secured Credit Card After Filing for Bankruptcy
You can also consider getting a secured credit card after filing for bankruptcy. A secured credit card requires you to deposit, and your credit limit will often be the same as your deposit. It’s an excellent way to rebuild your credit score since it shows lenders that you’re trying to manage your credit well.
Importance of Monitoring Your Credit Report
Lastly, it’s essential to monitor your credit report. Check it regularly for any errors and ensure everything is up-to-date. Doing this can address any issues with your credit report that could impact your credit score.
Filing for bankruptcy doesn’t have to mean the end of your credit score. Your credit may take a hit initially, but it’s not a permanent situation. By making on-time payments for the things you need, such as your rent, car, or house payments, and using credit cards responsibly, you can rebuild your credit score faster than expected. Rebuilding your credit is possible with patience and consistent effort. Remember, bankruptcy is just one chapter, not the whole story.
Work With Experienced Bankruptcy Attorneys Today
From our free bankruptcy consultations to our complimentary credit rebuilding program, OlsenDaines’ bankruptcy attorneys are here to help you with every step of the bankruptcy process. Because our bankruptcy experience is tremendous, we are able to address your financial difficulties with the expertise and careful planning you are seeking. Contact us by giving us a call or using our convenient online form.