Impact on the Credit Score
Filing for bankruptcy does impact your credit and your FICO score negatively and may discourage some lenders from extending loans. However, if you are considering filing for bankruptcy, it is likely that you are behind on your bills and that your credit has already been negatively impacted.
How Long Bankruptcy Remains on your Credit Report
Bankruptcies remain on your credit report anywhere from seven to 10 years. You can start rebuilding your credit right after you’ve filed for bankruptcy. While there are no laws prohibiting creditors from granting credit, your ability to obtain credit will depend on the creditor.
Tips on Restoring Credit after Bankruptcy
- Obtain a secured credit card. A secured credit card allows you to deposit funds into the account and make purchases and withdrawals. While the credit limit depends on the amount of funds that you deposit some banks may add a credit line if you have been making good payments.
- Try to get an installment loan. Even though the loan will have a high interest rate, it will help you improve your credit.
- Pay off credit card debt fully each month. This will show your creditors that you are a responsible consumer and have changed your habits.
- Regularly review your credit report to ensure that all the information that is reported is accurate.