Does Filing for Bankruptcy Affect my Credit Score?
Credit reports can show up to ten years after you declare bankruptcy under Chapter 7. Your credit score will face major effects when the bankruptcy records show on your report. You will not easily obtain a mortgage, car loan, or financing for other personal needs.
However, there are ways to speed up restoring your credit. The Law Offices of Kim Parker P.A. has the best Bankruptcy Attorney Baltimore MD who can help. Find out how long this type of bankruptcy remains on your credit reports in this article so you can know whether you need the help of a lawyer.
How Does Bankruptcy Affect Your Credit Score?
Declaring bankruptcy means you will not be paying back your obligations in full as arranged initially, which can significantly impact your credit rating. But how long does Chapter 7 bankruptcy stay on your credit report?
A bankruptcy filing can have a devastating effect on your credit rating. Chapter 7 bankruptcy can stay on your credit record for up to 10 years. After that, your bankruptcy will appear on your credit report in the public data, and lenders will likely consider it when making a lending decision.
Damages of Bankruptcy to Your Credit Score
If you cannot pay back your obligations, filing for bankruptcy may be an option. But how does bankruptcy affect credit? There are implications you should know before proceeding. Finding out the repercussions of this decision might help you make an informed decision.
Loss of property is arguably the most well-known effect of bankruptcy. To pay creditors, you must surrender property for sale in Chapter 7 of bankruptcy procedures. In some cases, declaring bankruptcy can result in losing assets like real estate, cars, jewelry, antique furniture, and other valuable belongings.
As bankruptcy hurts your credit — it is negative by prospective lenders and stays as lousy information on your credit report. When creditors see a bankruptcy on your credit report, they could decide against giving you credit or insanely high-interest rates.
How good your credit score was before declaring bankruptcy affects how much it declines. Your credit score will probably decline more than someone who already had a low score if you had a good to exceptional score before filing for bankruptcy.
Rebuilding Your Credit After Bankruptcy
No matter how long Chapter 7 bankruptcy stays on your credit report, your credit rating can still rise during that period. Thus, you can rebuild your creditworthiness as you keep adding new, favorable information to your credit report.
Here is how to rebuild your credit after bankruptcy:
Become a Credit Card Authorized User
Instead of getting a secured credit card, you can request to be an authorized user on one of your loved ones’ credit cards. Then, if the issuer reports the card’s good payment history to the three major credit agencies, you may see an improvement in your bankruptcy credit report.
However, your credit score could suffer if the principal cardholder misses a payment or exceeds their credit card limit.
Never Skimp on Payments
The primary credit element, which determines 35% of your FICO credit score, is payment history. Your credit score can rise if you promptly pay off any unpaid debts. But your credit score could face further harm if you make your payments late or default on a loan.
Get a Secured Credit Card
Similar to a standard credit card, a secured credit card works by using an upfront security deposit as security for your credit line.
You will build up some favorable history on your credit report if you use the card frequently, maintain a low balance compared to your credit limit, and pay your monthly bills on time. Additionally, you may accomplish all of this without incurring any interest if you pay off your bill in full each month.
Have a Budget and Stick To It
It is important to stay out of debt, which could ruin everything you have done up to this point. Making a budget and sticking to it is a great way to avoid this. Try not to spend more than you can afford, and only apply for credit when you have to.
How the Attorney Can Help
You may feel like filing for bankruptcy is the only possible solution to your debt problem. However, it can bring some serious repercussions to your credit score. But it is never too late. Chapter 7 Bankruptcy attorney Baltimore Maryland, can help you get your credit score back after a bankruptcy case. The Law Offices of Kim Parker P.A. have some of the most dedicated Bankruptcy attorney Baltimore MD. Contact us to help you get your financial ratings back.