How Long Does Bankruptcy Stay on My Credit Report?

While bankruptcy can provide debt relief, one of the side effects is the damage it causes to your credit score and credit report. People considering bankruptcy are often faced with questions such as:

• How many points will I lose on my credit report?
• What steps can I take to repair my credit?
• How long will it take to improve my credit score?

The good news is that, while it may take some time, you can repair your credit and finances through the bankruptcy process. Embarking on the bankruptcy process might seem daunting, but speaking with experts helps. When facing bankruptcy court, consult with a bankruptcy attorney as soon as possible.

Bankruptcy and My Credit Report

The period that bankruptcy stays on your credit report is determined by the type of bankruptcy you filed. Chapter 7 bankruptcy will remain on a credit report for 10 years, whereas Chapter 13 bankruptcy lasts seven years.

Any debts discharged during the bankruptcy process usually drop off after seven years. It is best to carefully review your credit report annually to ensure that the information published within is accurate. This is a habit to continue even after the conclusion of your bankruptcy case.

How Does Bankruptcy Affect My Credit Score?

Bankruptcy affects each person’s credit score differently based on various factors. But your credit score will most likely drop significantly, anywhere between 130 to 240 points.

In any event, you can expect bankruptcy to leave a severe dent in your credit or FICO score. The exact numerical drop will depend on many variables, including:

• Your initial credit score before declaring bankruptcy
• If bankruptcy involves a foreclosure
• How much debt you had
• How many accounts in collection were discharged

The higher the debt amount discharged and the more accounts you had in collection, the harder hit your credit score will take.

It’s also worth noting that your score will likely fall more if you had a higher (or better) credit score before you filed. Despite the ominous consequences we’ve just discussed above, there are several actions you can take to build your credit score back up.

How Do I Repair My Credit After Bankruptcy?

After bankruptcy, repairing your credit score still takes dedicated time and effort. This is why it is essential to keep practicing the good habits that were necessary throughout bankruptcy. Maintaining a solid foundation means staying on top of your finances and regularly reviewing your credit report for any disparities.

Regularly Review Your Credit Report

Credit reports are easy to obtain. You are entitled to an annual free credit report from each credit bureau (Equifax, Experian, or Transunion). While conducting your review, you may find discrepancies in their reporting. That’s because credit reporting agencies are notorious for including erroneous information in their reports. Knowing this can happen, correcting errors as soon as you find them is the best approach.

The Federal Trade Commission provides guidance on reporting errors on your credit report.

Maintain a Healthier Credit Lifestyle

Don’t wait until after your bankruptcy disappears from your credit report to rebuild your credit. Start rebuilding your credit as soon as possible after a bankruptcy filing. Don’t leave a hole in your credit history. It will take more work to obtain a reasonable interest rate from a lender later. There are a host of options for secured credit cards available.

Secured cards require a deposit but ensure that your credit history remains active. Pay off any credit card debt in full rather than just the monthly payment minimums. Avoid late payments, which can harm any good credit you develop.

Lessons Learned From Bankruptcy

It would help to have a good, strong financial plan from now on. This helps prevent relapse into another bankruptcy. Begin practicing good money habits and force yourself to maintain self-discipline in your personal finances and stay within your credit limit.

After you stabilize your financial situation, you can even apply for a home loan or personal loan and leave your bankruptcy in the past. If you have questions about which type of bankruptcy filing is right, talk to a bankruptcy lawyer for legal advice.