Far too many people fall prey to the myths surrounding bankruptcy and your credit report. Properly understanding how bankruptcy can impact your credit and the steps that you should take to repair your credit as soon as possible after filing can empower you for a successful future. One of the biggest myths surrounding bankruptcy is that if you don’t have any negative information on your credit report before filing, then your post-bankruptcy credit score will be much higher than if all the negative information associated with your debts was added before filing.
A lack of negative information or a positive payment history will not do a lot to minimize the impact of bankruptcy on your credit score. The strongest determining factors of your credit score are the length of time that the bankruptcy has been on your report and its very presence itself. Other people fall for the myth that all bankruptcy information will stay on your credit report for a decade with no exception. Only a Chapter 7 bankruptcy’s public record will last for ten years. All of the other bankruptcy-related references on your credit report are there for seven years, including Chapter 13 public record items, third party collection debts, and lines that state account included in bankruptcy.
Another common myth associated with bankruptcy in your credit report is that you’ll have bad credit so long as the bankruptcy information is still on the credit report. Although you will likely see a much lower credit score after bankruptcy, you can use smart credit management to begin building up your score again. After several years, you may even be able to get into a good range. You can build up your credit by keeping your credit balance under 30% utilization, making on-time payments for all debts and adding new credit to offset any negative information on your report. If you’re thinking about filing for bankruptcy, it’s time for a sit-down consultation with an experienced attorney.