One of the things that people worry about most when they are contemplating filing for bankruptcy is how will their credit score after bankruptcy be affected. They want to know how long their credit score will be affected and how low their credit score may go.
Credit has become such an important part of people’s lives that it can be difficult to imagine not being able to use it without any restrictions. Having a low or undesirable credit score can also be inconvenient. As a result, some people are so scared about even losing an average to below average credit score that they will continue to struggle to pay their debts. Unfortunately, many of them will eventually have to file for bankruptcy. Unfortunately, when it comes to your credit score after bankruptcy, there is not a lot of positive news.
The Ways a Bankruptcy Can Affect Your Credit Score
It is almost impossible to tell how far your credit score will fall after you have started the process of filing for bankruptcy. However, the amount of damage done to your score will be based on the score you had before bankruptcy as well as the type of information that is on your credit report.
There was a report released by FICO that stated how credit and financial mistakes such as bankruptcy can affect a person’s credit score. The report showed that if prior to bankruptcy your score was already around 500, you would not have as much of a credit score to try to protect from bankruptcy. No one knows for sure just how much their credit score will drop after bankruptcy.
The Differences between Bankruptcies
There are different chapters of bankruptcy for personal debts. These bankruptcies are Chapter 7 and Chapter 13. Chapter 7 is the fastest type of bankruptcy, and most filers get a discharge within several months. Chapter 13 takes years to be complete.
You can bring life back to your credit score after bankruptcy. Once your financial situation has improved, begin the process of rebuilding your credit. This will show creditors that you are making a conscious effort to improve your credit rating and payment history.
Learn more about debt relief options by scheduling a free consultation.