After bankruptcy, you should be able to concentrate on improving your credit score for the next 12 to 18 months. When they take the correct actions, most people will experience some improvements within a year. You won't be able to get a bankruptcy removed from the credit record unless it was added in error. Bankruptcy has a greater impact on high credit scores as compared to low credit scores.
The higher the FICO score is for filing for bankruptcy, the greater the impact on the credit rating:
Credit Score Ranges
- (850-800) Excellent 200 points
- (740-799) Very Good 200 points
- (670-739) Good 200 points
- (580-669) Fair 130-150 points
- (300-579) Poor
Regardless of your starting credit score before bankruptcy, you will most certainly not drop a significant drop after bankruptcy. Although your bankruptcy filing will be on your credit report, credit bureaus would like to make sure you take steps to repair your bad credit prior to taking on further debt and new credit. This will handle credit scores and bankruptcy.
This sliding scale system would deduct as many points as it takes to demonstrate that you have bad credit. If you also have poor credit, the score might barely improve (less than 579). Even post a bankruptcy filing; credit ratings of less than 500 are uncommon.
What Impact Will Bankruptcy Have on Your Credit Score?
When you file bankruptcy, as well as businesses, see the unfavorable information on the credit report, you might well be concerned about:
- Obtaining a vehicle loan
- Purchasing a home or renting an apartment are both viable options.
- Financing with high-interest rates
- Unsecured credit cards have low credit limits.
- Repayment schedules for student loans
- Late fees are subject to penalties.
- Credit should not be used for anything other than basics.
- Obtaining substantial cash deposits
- Obtaining loans without the assistance of a competent co-signer
- Some credit cards can have authorized users added to them.
- Deposits and refunds of security deposits
Whether you have credit or debt problems, you have solutions for all of these situations. Each issue can be addressed on your own or with professional assistance. It is possible to start over, particularly after filing for bankruptcy.
Post a bankruptcy, how do you rebuild your credit?
You can rebuild your credit with the following aspects:
- Post the bankruptcy stay prevents creditors from taking action against you, you can begin restoring your credit score. Bankruptcy stays on your record for seven to ten years, but the more you try to rebuild your credit each year, the less it will affect you as well as the financing you seek.
- After receiving the final discharge, you should wait 30 days. This implies that most (if not all) of the accounts will have zero balances, and creditors will no longer be able to contact you regarding obligations.
- If you still have credit cards, make a plan to pay off at least 70% of the balance each month. Every 6 months, doesn't open more than a new credit card (and solely when you can make the payments).
- To gradually establish a diverse mix of affordable debts, work towards that car loan or similar major loan.
If you try to restore your credit over 12-18 months, your FICO credit report could go from bad credit (often less than 579) to acceptable credit (580-669). This will take significantly longer to get a very good (740-799), decent (670-739), or exceptional (800-850) credit score.
Call Fong Law Group at (626) 289-8299 for a free consolidation, and talk to an attorney today. We are here to help you get through this difficult time in your life, and help you with a Fresh Start.