Are you thinking about filing a bankruptcy but you are worried about what it may do to your credit score? If so, you are not alone. Many people continue to struggle with debt much longer than they need to because they worry about how long will a bankruptcy stay on a credit report. However, as they continue to avoid bankruptcy for fear of what it may or may not do to their credit score, they are damaging their credit score with late payments, over-the-credit limits, collection accounts, foreclosures and liens. By the time a bankruptcy is filed, their credit score is already damaged from the debt problems.
Bankruptcy and Your Credit Report
If you file a Chapter 7 bankruptcy case, the Chapter 7 will stay on your credit report for 10 years from the date of the filing of the case. If you file a Chapter 13 bankruptcy case, the Chapter 13 will stay on your credit report for 7 years from the date of the filing of the case. Now this does seem like a very long time and it is the reasons for so many falsehoods stating that you will never be able to recover from bankruptcy. The truth is that filing bankruptcy can help improve credit scores that were significantly damaged prior to the filing of the bankruptcy.
Most clients report that within a year after filing bankruptcy they experience a slight increase in their credit score. For those who follow the tips for improving credit scores following bankruptcy, they can see a significant increase within one to two years after filing bankruptcy. The key to rebuilding your creditor and reducing the negative effects of having a bankruptcy on your credit report is to be patient and follow the tips below.
Tips for Improving Credit Scores after Bankruptcy
Depending on your financial situation, you may not be able to follow all of these tips but you can definitely make the first tip a top priority.
- Pay all future payments on time. Payment history accounts for 35% of your credit score. Following bankruptcy, make all future payments before the due date. Put payments on automatic draft if this helps you avoid late payments.
- Make sure your landlord reports your rental payments. Some apartments report payments by tenants to the credit-reporting agency. Having a creditor report on-time payments helps to increase your credit score faster.
- Open a secured credit card. You must place a deposit equal to the credit limit for the card (typically around $300) but you can then use the card just as you would any other credit card. As you continue to use the card and make on-time payments, you will see an improvement in your credit score.
- Open an installment account. If you do not have an installment account, when you are financially stable, open a small installment account and pay all payments on time until the account is paid in full. This adds to the diversity of your accounts, which can increase your credit score.
- Review your credit report. Make sure that all accounts that were discharged in bankruptcy reflect a zero balance owed with no past due balance. If not, contact the creditor and the credit reporting agency in writing to request that they correct this information immediately (include a copy of your Order of Discharge).
Contact an Experienced Mount Holly Bankruptcy Attorney
Personal Approach, Professional Service, Affordable Payment Plans
The Law Office of Travis J. Richards, LLC is a full-service Mount Holly bankruptcy law firm focused on Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, debt consolidation, credit repair, tax liens, student loans and foreclosure. We represent clients in Burlington County and throughout South Jersey.
Contact our office at 609-267-5297 to schedule your free consultation to discuss bankruptcy and non-bankruptcy alternatives. You may also use our convenient online contact form and one of our friendly, professional staff members will contact you to answer your bankruptcy questions and/or schedule a free consultation with Travis J. Richards.
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