What Happens to Your Credit Score After Bankruptcy?

Monday, January 31, 2011

What Happens to Your Credit Score After Bankruptcy?
In most cases, the credit score is already very low to begin with, so what happens to your credit score after bankruptcy immediately would be very little change, if any. The bankruptcy itself will impact any future efforts to obtain credit.

Most persons who have gone bankrupt discover that very quickly they will be receiving new offers of credit. The reason for this is that the lenders understand that a person will not be able to again claim bankruptcy for a period of from 4 to 7 years, depending on what type of bankruptcy they just completed.

The bankruptcy discharge eliminates claimed old debt. In time, everything will move down the credit history and any credit score then has an opportunity to recover. Within two years following a bankruptcy, most persons are again obtaining credit, mortgages, and so forth. Even if a bankruptcy is claimed, the person going bankrupt can exempt certain debts that they are willing to continue to pay. This is good for the credit history and score, as long as each and every payment is done meticulously on time and in the full amount due.

Since recovery from bankruptcy takes a long time, it is a great opportunity to work on improving a credit history by being extremely responsible for any remaining or new debts. The credit score will gradually recover and once the discharge is ten years past, even the negative of the bankruptcy will drop off the credit record, and a credit score can jump higher.

During a bankruptcy discharge, the credit record is cleansed of all old bad debts and history of late payments. Accounts that are included in the bankruptcy will instead carry a note that the debt was included in the bankruptcy. This alone may actually cause a credit score to go up slightly, as there are less notations of poor payment history remaining on the credit record.

A desire to improve a credit score should never be the reason to declare bankruptcy. The act of going bankrupt will be a negative entry on the credit history for a full ten years or longer, and lenders will see a problem. Slow and steady is always the best way to improve a credit history, which will, in turn improve the scoring calculations.

What happens to your credit score after bankruptcy really depends on how responsible you are paying remaining or new debts in the future years. Bankruptcy offers the borrower a chance to start over anew, with a cleansed record. If the same mistakes are repeated, the credit history and credit scores will suffer and another bankruptcy action will not be available for many years.

If unsecured credit is not available to you following a bankruptcy, consider a secured credit account. Be totally responsible for making all payments on time and this is an excellent way to rebuild credit history records and your credit score.


  1. Great Post, I strongly agree here in the process of bankruptcy, They explain well. I also find that Before you decide to declare bankruptcy, ensure that all other options have been considered. If you owe small amounts of money, you may be able to manage it with credit counseling. You may also find success in negotiating lower payment arrangements yourself, but be sure to document any get and new agreement terms in writing from each creditor.

  2. It is absolutely necessary for a person to have sufficient amount of control over his financial condition. I think Financial advice services can go through all way.


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