Bankruptcy & Your Credit

It’s unlikely that bankruptcy will cause your score to decrease more. However, if you have a high credit score and still need to file bankruptcy (not uncommon) then it’s possible you’ll see a decrease in your score.

Despite the fact that a Chapter 7 bankruptcy will be reported on your credit report for up to 10 years (7 years for a Chapter 13 case), once you’ve received a discharge you can still improve your credit score during that period. Because a person has taken action to improve their financial situation, their credit score will begin to increase shortly after receiving a discharge. But in order to build your credit score after bankruptcy, it’s important to take, at minimum, these three steps.

1) If you have a car loan or mortgage that weren’t discharged in the bankruptcy case makes sure they are paid on time each month.

2) Get a new credit card. (Low limit unsecured or a secured card) and make sure to pay it on time and avoid running a balance in the next billing cycle. Make sure the credit card company (underwriter) reports to the three credit bureaus.

3) Check your credit report at least once a year for accuracy. Go to www.annualcreditreport.com