How Will Filing a Bankruptcy Affect Your Credit?

Your credit can affect whether or not you get certain jobs, a personal loan for a car or home, certain rental property, and a wide variety of other things. So, how will filing a bankruptcy affect your credit?

When you file for bankruptcy protection, the filing is reported to all credit reporting agencies and can have an immediate negative impact on your report, but this impact may not be as severe as some of you might think.

By the time you file for bankruptcy, your credit rating scores most likely have already dramatically dropped. If you have credit, your credit rating score will fluctuate somewhere between 300 and 850 points. 850 is a perfect credit rating and 300 is a very poor rating. To have less than 300, it is said you have no credit history at all. Therefore, your score will only drop as much as 550 points.

Filing for bankruptcy causes your ratings scores to drop some, but it only adds to the drop that has already begun to occur. Most likely, your rating after filing a bankruptcy is going to be somewhere between 300 and 550 points, depending on the severity of your circumstances.

If you do nothing about your credit scores, your scores can remain low as long as you have a bankruptcy on your report and do nothing to increase your score. The good news is filing for bankruptcy does not have to prevent you from getting new credit.

There are a wide variety of ways to rebuild your credit, and there are a few ways to expedite the process. For instance, paying your bills on time and in full, like your utility bill, is the surest way to build your credit rating. Likewise, not paying your regular bills on time can be one of the fastest ways to destroy your credit rating.

There are some ways to expedite the process of building your credit rating. Borrowing money is the the fastest way to build your credit rating, but who will loan you money after a personal bankruptcy? There is a whole new class of lenders who target former bankrupt debtors as new customers. They are looking for new business, and they don’t mind charging those who are bankrupt a higher interest rate to give them the chance at starting over. They understand the risks involved and build it into their quotes.

You might ask yourself why they would take the risk. People who have filed for bankruptcy can be good credit risks. With the passing of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, you have to wait longer between bankruptcy filings, making it easier for the bill collectors to collect any bad debts.

Also, filing a personal bankruptcy is viewed by many creditors as a reasonable response to handling a bad financial situation. Once a bankruptcy is discharged, your debt load has immediately vanished. As a result, your credit rating immediately goes up slightly.

Combine these facts that the loan vendors think it is now easier to collect on a bad loan from you, they can charge you high interest rates for the additional risk, and they can deal with a customer who appears to be reasonable in their financial dealings.

Although a bankruptcy will remain on your credit report for up to 10 years, you can still build your credit back to pre-bankruptcy days in a relatively short period of time as long as you make timely payments on all your bills.

Do not allow credit scores to control your life. If you need a chance to financially start over and rebuild your credit, you might want to talk to a bankruptcy lawyer. If you need relief from the stress of debt and you live in or around the metropolitan areas of New Haven or Meriden, Connecticut, contact us at www.betterbankruptcy.com .We will help you find a bankruptcy attorney in your area who will answer your bankruptcy questions.

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