How To Build Credit After Bankruptcy

When you file for bankruptcy, there are a lot of things that go into it. Your credit score is one of them. Your credit score could take a big hit depending on your score before filing and the type of bankruptcy you choose to file. This can make it challenging to rebuild your credit after bankruptcy discharge. In this blog post, we will learn more about credit score and their importance and tell you how to start rebuilding your credit and get back on track!

What Is A Credit Score, And Why Is It Important?

Your credit score is a three-digit number that lenders use to measure how risky it is to lend you money. A high credit score means you’re a low-risk borrower, leading to lower interest rates on loans and credit cards. A low credit score could mean you’re a high-risk borrower, leading to higher interest rates and difficulty getting approved for loans and credit cards. So, what happens to the credit report of the person filing for bankruptcy? Let’s find out!

What Happens To The Credit Report Of The Person Filing For Bankruptcy

Now that you know about the credit score, you might also want to know about what happens to the credit report of the person filing for bankruptcy? When you file for bankruptcy, an automatic stay goes into effect. This stay prohibits creditors from taking any actions to collect on your debt. This includes calling you, sending you letters, or initiating any legal proceedings. The automatic stay also stops the credit reporting agencies from reporting the bankruptcy on your credit report.

The Different Types of Bankruptcies and How They Impact Your Credit Score

If you’re facing bankruptcy, you’re probably wondering how it will impact your credit score. The answer depends on the type of bankruptcy you file.

Here’s how each type of bankruptcy will affect your credit score: 

  • Chapter 7 bankruptcies stay on your credit report for up to 10 years and can lower your credit score by up to 240 points. 
  • Chapter 13 bankruptcies stay on your credit report for up to 7 years and can lower your credit score by up to 160 points. 

While bankruptcy will stay on your credit report for up to 10 years, that doesn’t mean your credit score will be impacted for the entire ten years. In fact, you can start rebuilding your credit as soon as the bankruptcy is discharged. 

How To Build Credit After Bankruptcy Discharge

If you have recently gone through bankruptcy, you may be wondering how to build credit after bankruptcy discharge. There are a few things you can do to start rebuilding your credit rating after bankruptcy discharge. Try to get a secured credit card with a low limit. Use it responsibly and pay your bill on time. You can also get a cosigner for a loan or apartment lease. Another option is to become an authorized user on someone else’s credit card account. Building credit after bankruptcy discharge takes time and patience, but it is possible. By following the tips above, you can gradually improve your credit score and get back on track financially.

Wrapping It Up

Bankruptcy is not the end of the world. In fact, it can be the beginning of a new and improved financial life if you take the necessary steps to rebuild your credit. Following these tips can start repairing your credit score and work your way back to good standing. It won’t happen overnight, but with patience and perseverance, you can get there.