Credit reports have a way of running your financial life even though they remain a mystery for many people. It is wise to learn how your bankruptcy may impact your credit score before making any decisions about filing.
Bankruptcy and Your Credit Report
Bankruptcy appears as a bad mark on your credit report. It will lower your credit score and be made available to individuals who have access to your credit report such as landlords and employers (usually consent is required). Here are various forms of bankruptcy and the amount of time each is supposed to remain on your credit report:
- Chapter 7 - generally stays on your credit report for up to ten years.
- Chapter 13 - generally remains on your credit report for up to seven years.
There is work that you can do to improve your credit score even while a bankruptcy still appears on your credit.
If your creditor reports an action such as failure to make a timely payment, it will appear on your credit report for a certain time period. Here is a list of various bad credit marks and the length of time they usually remain on credit reports:
- Late payments - remain on your credit report for up to seven years.
- Credit inquiries - remain on your credit report for up to two years.
- Charge offs and collections accounts - can remain on your credit for up to seven years.
- Lawsuits and legal judgments - can stay on your credit for seven years or the length of time allowed under the law.
- Federal student loans and tax liens - both will stay on your credit for as long as they are unpaid. Once they are paid, they may remain on your credit for up to seven years.
Some things you can do after bankruptcy and other bad credit marks to help improve your credit score (which is what most creditors base credit on) include:
- Use credit. Using credit, if done carefully, can actually improve your credit score.
- Pay all payments on time.
- Write to creditors to clear up any mistaken credit marks, and send copies of correspondence to credit reporting agencies.
Getting Legal Advice
For help with filing bankruptcy and assessing damage to your credit score, talk with an experienced bankruptcy attorney in your jurisdiction. An attorney will help you look at your financial situation with a new perspective. You will be able to better make decisions about your future with an understanding of how bankruptcy would work for you.
