Your Credit Score After Bankruptcy
While bankruptcy can ultimately be a positive experience, there are certainly some downsides. One of which is the fact that it will affect your FICO score for up to ten years. Different laws come into play, depending on your debts and your unique situation, but it will certainly be affecting you for a long time no matter what you do. After all, filing for bankruptcy is basically telling all creditors you’re in a relationship with that you can’t pay your bills anymore. How would you like it if someone personally did that to you?
The acronym FICO stands for Fair, Isaac and Company, which is the company that developed the credit score formula. This score helps creditors and banks decide whether or not you’re a good candidate for a loan. Lending institutions use it as the most popular way of deciding who to give loans and financing to.
Almost all credit decisions boil down to this simple, yet important formula and number. How does this affect you directly? Figuratively put, filing for bankruptcy puts an asterisk by your name, saying that I’ve defaulted on loans before, and it’s not in your best interest to provide me with your money. While that’s a rather harsh generalize, it’s the truth, and is difficult, but not impossible to climb back out of.
Assuming you’ve filed for bankruptcy and come out on the other site already, successfully discharging most if not all of your debts, it’s now time to start looking to rebuild your credit. Think small at first, but you don’t have to be too careful. You’ll be surprised how many credit card companies will still give you the time of day even though you recently filed for bankruptcy. To start re-improving your credit score, it’s a good idea to take out a few low limit credit cards, a few thousand dollars at the most. Only charge what you can afford to pay each month, pay the minimum a few times, and then completely pay it off.
Bankruptcy is a tough, long process, but definitely one you can get through. It almost all cases, your credit score will be lowered drastically, possibly into the 400 or 500 range. Don’t worry though, as long as you stay disciplined and diligent about your budget, you’ll start to rebuild it in no time. However, this isn’t a time to go crazy. By living beneath your means, you can realistically start to rebuild your score into the 600 to 700 range within less than five years. By no means is it an easy road, but with the right approach and debt management program you can climb back up the ladder.
While a bankruptcy legally stays on your credit report for up to a decade, it’s ultimately up to the lender if they’ll provide you with the financing or loan you need. If your credit score has been steadily improving and you explain your situation to them, there’s a much better chance of being approved.
Remember, in order to rebuild your credit you’re going to have to re-apply for some credit cards. Simply paying cash and keeping your bank account in good standing won’t do much for you. This time of your life should be a wakeup call, and set you back on the right path. Cut back, and do a little more window shopping. You and your credit score will come out that much more ahead!
The acronym FICO stands for Fair, Isaac and Company, which is the company that developed the credit score formula. This score helps creditors and banks decide whether or not you’re a good candidate for a loan. Lending institutions use it as the most popular way of deciding who to give loans and financing to.
Almost all credit decisions boil down to this simple, yet important formula and number. How does this affect you directly? Figuratively put, filing for bankruptcy puts an asterisk by your name, saying that I’ve defaulted on loans before, and it’s not in your best interest to provide me with your money. While that’s a rather harsh generalize, it’s the truth, and is difficult, but not impossible to climb back out of.
Assuming you’ve filed for bankruptcy and come out on the other site already, successfully discharging most if not all of your debts, it’s now time to start looking to rebuild your credit. Think small at first, but you don’t have to be too careful. You’ll be surprised how many credit card companies will still give you the time of day even though you recently filed for bankruptcy. To start re-improving your credit score, it’s a good idea to take out a few low limit credit cards, a few thousand dollars at the most. Only charge what you can afford to pay each month, pay the minimum a few times, and then completely pay it off.
Bankruptcy is a tough, long process, but definitely one you can get through. It almost all cases, your credit score will be lowered drastically, possibly into the 400 or 500 range. Don’t worry though, as long as you stay disciplined and diligent about your budget, you’ll start to rebuild it in no time. However, this isn’t a time to go crazy. By living beneath your means, you can realistically start to rebuild your score into the 600 to 700 range within less than five years. By no means is it an easy road, but with the right approach and debt management program you can climb back up the ladder.
While a bankruptcy legally stays on your credit report for up to a decade, it’s ultimately up to the lender if they’ll provide you with the financing or loan you need. If your credit score has been steadily improving and you explain your situation to them, there’s a much better chance of being approved.
Remember, in order to rebuild your credit you’re going to have to re-apply for some credit cards. Simply paying cash and keeping your bank account in good standing won’t do much for you. This time of your life should be a wakeup call, and set you back on the right path. Cut back, and do a little more window shopping. You and your credit score will come out that much more ahead!
