The Effects Of Chapter 7 Bankruptcy On Your Credit And Ways To Improve Your Score
When you file for Chapter 7 bankruptcy, you will probably understand that it will have an adverse effect on your credit score. While this is true, it is important for you to understand how a bankruptcy will affect your credit, and what you can do to help improve your credit score faster. Here are some tips to help you understand what to expect with your credit, and steps you can take to improve your score.
How Bankruptcy Is Reported
As soon as you file for Chapter 7 bankruptcy, the credit bureaus will be notified. The bankruptcy will appear on your credit report as a public record, and this is something that is considered derogatory. The Chapter 7 bankruptcy posting will remain on your credit report for up to 10 years from the time you filed, and there is really no good way to get this off.
When the bankruptcy is posted to your credit report, you can expect your score to drop anywhere from 160 to 220 points. For example, if your credit score was 700 before you filed, it could be as low as 480 after the bankruptcy posts on your report. The bankruptcy posting can negatively affect your credit for as long as it remains on your report.
What To Look For On Your Credit Report
Within 60 days of filing for bankruptcy, you should get a copy of your credit report from the three major credit bureaus so you can review the reports to make sure they are accurate. Each of the bureaus may report your information in slightly different ways, but all three bureaus typically have the same information on file.
When you receive your reports, you should thoroughly examine each item listed on each of them. By doing this, you will be able to spot errors, but you will need to know what to look for. The main goal is to look at each account included in the bankruptcy to make sure they do not:
- State they are open
- Have current balances owed
- State they are late or delinquent
If any of your accounts show information like this, you will need to dispute the items to make sure the status is changed. Each account discharged in your bankruptcy should state zero balances, and each should state that it was part of a Chapter 7 bankruptcy.
In addition, if you reaffirmed a car or house loan during the bankruptcy, it should have a note that says it was reaffirmed. When a loan states this, your payments and balance of the loan will continue showing up on your credit reports each month, and this may help you improve your credit score.
Ways To Improve Your Credit Score
Disputing any items that are listed wrong should be your first step in getting your credit score back up to where it was before you filed for bankruptcy. Disputing items on a credit report takes time, though, and you must dispute each item with each of three bureaus. Once this is complete, you can move on to finding other ways to help your score increase. This includes the following:
- Applying for a secured credit card – Adding a new account to your credit file can help improve your score; however, you should keep the balance of this card as low as possible.
- Getting a car loan – A car loan can also help your score, because it will show that you are making monthly payments, and payment history is an important part of your credit score.
These are some ideas of things you could try to improve your credit score, and they might make a big difference. If you would like to learn more about how bankruptcy will affect your credit, contact a bankruptcy attorney today. For more information, contact a business such as Wade Bettis, J.D., Ph.D., PC.