If you are having financial struggles, you may be wondering: How will my actions affect my credit scores? This is a good question to ask and a good time to ask it. Your credit score determines in a large part when you will be able to get credit, how much credit you can get and who will be willing to provide it to you.
Bankruptcy and Your Credit Score
The amount that a bankruptcy will impact your credit score depends largely on your financial situation before you filed for bankruptcy. By the time most people end up in bankruptcy, they have already had a series of unfortunate bad financial situations that may already have ruined their credit. In those cases, a bankruptcy is not going to make the situation much worse.
Late payments, repossession and failure to make debt payments can all result in negative credit impact for up to seven years. For people who have no prior bad credit, bankruptcy will generally knock your credit score down two to three hundred points. That is a pretty big blow, but the chances of having to file bankruptcy for someone with impeccable credit are low.
If you do file for bankruptcy, the good news is you can restore your credit even before your bankruptcy is removed which will take seven to ten years depending on which type of bankruptcy you file. Here are some tips for getting your credit score back up where you want it:
- Pay your payments early or at least on time. You can set up many of your debt payments on-line or though automatic withdrawal from your bank account. This can be helpful if you are busy or forgetful.
- Use some credit to gain credit. You may think that using cash only is the best policy after your financial difficulties, but you have to actually use credit to improve your credit score. Maintaining one or two smaller credit accounts can help you get back in the credit game.
Getting Legal Advice
Financial struggle can be daunting; it can feel like your life is no longer enjoyable when you do not have enough money to meet daily needs. Getting the help of an attorney to assess you financial situation can turn your life around. An attorney can help you review your options which may include debt consolidation, debt settlement, bankruptcy and other options.
