Bankruptcy provides a fresh start when you're dealing with overwhelming debt, but it will have a negative impact on your credit score. The size of the impact is hard to predict, however.
A poor credit score won't necessarily mean credit is out of reach. Some financial institutions openly solicit business from persons who have recently filed under Chapter 7 because it will be at least eight years before they can file another Chapter 7 case. If there are compelling reasons for filing a Chapter 7 case that are not within the person’s control—such as an illness or injury—some credit rating agencies may also take that into account in rating the person’s credit after filing.
Increasing Your Credit Score After Bankruptcy
Increasing your credit score after bankruptcy isn't easy, but you will rebuild your credit if you are patient and practice good financial habits. Steps to consider include:
- Review your credit report and make sure it is accurate.
- Create a monthly budget and stick to it.
- Set up monthly automatic payments so your bills are paid on time.
- Build an emergency savings account.
- Obtain a secured credit card.
- Have a co-signer on a credit card or loan.
- Become an authorized user on another person's credit card.
- Keep your credit utilization at 30% or less of your credit limit.
Contact Us Today
If you're considering filing for bankruptcy, the legal team at Steffens Law Office can explain your options and help you decide how to best proceed. Call today to schedule a case review.