How Bankruptcy Can Help Your Credit Score
Richard Fonfrias, J.D.
Chicago's Financial Rescue & Bankruptcy Lawyer
Fonfrias Law Group, LLC
Within a few months after of their bankruptcy discharge, most of my clients see their credit scores increase. But without a discharge, the negative items can remain on their credit report for up to seven years.
Your Credit Report Now
How bankruptcy affects your credit score depends partly on your credit rating before you filed. If your credit score was very high, then you can expect it to decrease about 125 points after you file. And you can expect it to rise again, too. However, if your credit score already had a number of late charges and judgments, then filing for bankruptcy may not cause it to sink much lower.
If you haven't seen your credit report lately, then order a free copy now from annualcreditreport.com. Beware: When you order it through this website, it's free, which is not the case if you order through other websites.
If you're considering bankruptcy, you may already know that your credit report contains late charges, judgments, foreclosures, and other negative items. In this case, your credit score is already low. And if these negative items haven't appeared, if you're slow paying your bills, they'll show up soon enough.
Your Credit Score Improves After Bankruptcy
After you receive your bankruptcy discharge, most if not all of your debts have been erased. Now's the time to start building your credit score again.
If you don't file for bankruptcy, then the negative notes in your file will stay there for varying periods of time, depending on the type of creditor that put it there. And unless you file for bankruptcy, you'll have a challenge rebuilding your credit while your delinquent accounts and negative notes remain.
Your New Credit History
After you've received your bankruptcy discharge, your new credit clock starts ticking. From now on, each new positive item will boost your credit score. In addition, your bankruptcy becomes less important in your new credit score with each passing day.
I suggest you check your credit report a few months after you receive your bankruptcy discharge. You'll likely notice that your credit score is much higher than before, just as you predicted.
Your Bankruptcy is Not Permanent
Credit bureaus may keep a bankruptcy on your credit record for up to ten years from the date it is filed. But as you rebuild your credit, the bankruptcy's impact will decrease with each passing month.
Still, some people will always look at your bankruptcy as a big black eye. It's one of those things that some people see and won't let go of.
Even so, the key question a potential lender has is this: Will you make your payments on time?
And since you just erased a mountain of debt, you are a far better credit risk now than you were before you filed for bankruptcy.
Combine your clean slate - with your job status and income - and your bankruptcy can truly increase your ability to gain new credit.
And this is the fresh start so many people need - and get - with a bankruptcy.
If you have any questions about how filing for bankruptcy will affect your credit score, please contact me at firstname.lastname@example.org, or call 312-969-0730. I am always happy to give further information and discuss how bankruptcy can provide for those struggling with debt the opportunity to make fresh financial start. My Chicago law practice specializes in assisting people and businesses in debt. Let me show you how bankruptcy can help eliminate creditor calls, erase credit card debt, and put you on the path to a brighter future.