How does Bankruptcy Affect my Credit?

Your credit report will reflect your bankruptcy filing for up to 10 years, but many credit reporting agencies will remove it after 7 years. But, for many consumers, a 90-day late payment and a bankruptcy have approximately the same effect on their credit score. The bankruptcy stays on your credit report for up to 10 years, but its negative effect on the credit score starts to decrease around year 2.

If your credit was in bad shape prior to filing for bankruptcy (which is the case for most everyone considering bankruptcy), your credit score can actually improve after a bankruptcy. This is because the credit reporting agencies reclassify you with other people who have filed bankruptcy, and also because many lenders will you as less of a risk because you have improved your financial situation by wiping out debt through bankruptcy and you are unable to wipe out future debt in another bankruptcy anytime soon.

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