How Does Bankruptcy Affect Your Credit
One major concern that a lot of people have when filing for bankruptcy is how it will affect their credit – with good reason. When you file for bankruptcy, it can have a serious and negative impact on your credit, but it’s not the end of the world.
Filing for Bankruptcy and Credit Score
There are three major credit reporting companies in the United States:
When determining someone’s credit score, they look at a number of different factors, including:
- Loans Open
- Credit Accounts
- Credit Limits
- Outstanding Balances on Accounts
- Late Payments
- Amount Paid
- Delinquent Accounts
- Unpaid Taxes
- Court Judgments
- Frequency of Credit Report Analysis by Potential Lenders
Another major factor that credit reporting companies look at when formulating your credit report is whether or not you have a bankruptcy on file.
How Filing for Bankruptcy Affects Your Credit Score
When you file for Chapter 7 Bankruptcy, it can stay on your credit report for up to ten years from the date of filing. Filing for Chapter 13 Bankruptcy can stay on your credit report for up to seven years.
When loans and accounts are discharged or reduced as part of your bankruptcy, they will include a notation on your credit report, such as:
- “included in bankruptcy”
- “charged off in bankruptcy”
After filing for bankruptcy, it may be difficult to obtain a new loan or line of credit, and this also depends on your credit score before filing. If you had a high debt to asset ratio, the impact of filing for bankruptcy on your credit score will be lower.
If you start off with a good credit score and then file for bankruptcy, the impact on your credit score will be greater. However, there are certain things you can do while you wait for the bankruptcy to clear from your credit report in order to improve it, such as:
- Pay All Bills On Time
- Keep Outstanding Balances Low
As more time passes and older debts drop off, your credit score will improve.
Find a Bankruptcy Lawyer in Michigan
Going through bankruptcy can be stressful, and we are here to help. Our team of bankruptcy lawyers will work with you to come up with the best possible solution for your debt problems.
Contact us online or call (734) 397-4540 to set up a free bankruptcy attorney consultation today.