It can take anywhere from one month to two years for your credit score to go up after bankruptcy. Maintaining positive habits for at least a year could even bring your score up to the "fair" range. A recent study found that within a year of filing for bankruptcy, 43% of individuals had a credit score of 640 or higher. Within two years, 65% of people had a score above 640.
Filing for bankruptcy will cause your credit score to plummet, but you can begin rebuilding your credit by opening a new secured credit card after completing the bankruptcy process. These cards generally accept applicants with recent bankruptcies and are an easy way to begin rebuilding credit. If you use the card responsibly and make payments on time, you should see a small improvement to your credit score within a month.
Rebuilding your credit score after a negative event takes time, and bankruptcies are no exception. At first, you will only see your credit score improve in small amounts, but on-time payments will gradually boost your score more significantly. It can take years for your credit score to fully recover after a bankruptcy, but you can begin taking steps towards credit repair immediately.
The average credit score after bankruptcy is about 530, based on VantageScore data. In general, bankruptcy can cause a person’s credit score to drop between 150 points and 240 points.
In most cases, your credit score will drop more after a bankruptcy filing if it was in good shape beforehand. The effect on your credit score can also vary based on the number of accounts and the amount of debt in your bankruptcy filing; fewer accounts and lower debt will often translate to less credit score damage.… read full answer
You can check out WalletHub’s credit score simulator to get a better idea of how much your score will change due to bankruptcy.
How long a bankruptcy affects your credit score depends on the type. A discharged Chapter 13 bankruptcy will stay on your credit report for 7 years from the date of filing. A non-discharged Chapter 13 bankruptcy remains for 10 years from the date of filing. And Chapter 7 bankruptcy remains on your credit report for 10 years from the date of filing. It can take several years for your credit score to fully recover from bankruptcy, and you may not see your score reach its pre-bankruptcy level until the bankruptcy record falls off your credit report.
You could potentially experience some credit-score relief after the debt associated with your bankruptcy has been discharged. For example, your debt-to-income ratio could improve with the removal of accounts that had high balances. Once you’ve completed the bankruptcy process, you can also begin to repair your credit score almost immediately. You can expect that process to take around 7 to 10 years for a full recovery.
If you filed for Chapter 7 bankruptcy, you should be able to get a secured card as soon as your bankruptcy is discharged. If it was Chapter 13 instead, you’ll need the approval of the trustee during your payment plan.
Credit card issuers generally won’t approve you for any cards while you’re still in the bankruptcy process. But once the bankruptcy discharges, you can get a card that fits your needs.
Here’s how soon after bankruptcy you can get a credit card:
Secured credit card: After bankruptcy discharged
These cards require a refundable security deposit, usually at least $200, which doubles as your credit limit. Because you’re putting up your own money, your approval chances are high.
The Capital One Platinum Secured’s only bankruptcy requirement is that the case must be fully discharged. Some cards, like OpenSky, don’t even check your credit report when you apply, so they’re great for post-bankruptcy credit improvement.
Unsecured credit cards for bad credit: After bankruptcy discharged
Credit cards that don’t require a security deposit are a lot harder for people with bad credit to get than secured cards. They’re also much more expensive, both in terms of interest rates and fees.
One example is the Credit One Visa. Credit One Bank says a discharged bankruptcy won’t hurt your approval chances, but could lead to a lower credit limit and a higher annual fee.
Authorized user: Immediately
If a friend or family member makes you an authorized user on their credit card account, that account will be added to your credit reports, and you’ll benefit if the main account holder pays the bill on time every month. If your friend or relative allows it, you will also get a card with your name on it to use for purchases.
After your bankruptcy is discharged, you may still have difficulty getting approved for a new credit card at first. Some issuers may deny your application simply because there’s a recent bankruptcy on your credit report. However, some lenders might be more lenient. That’s because of rules that restrict when you can file for a second bankruptcy, making you a low risk of filing for bankruptcy again.
A bankruptcy appears on your credit report almost immediately after you file. A Chapter 13 bankruptcy, which implies that you repay a portion of your debt through a debt repayment program, remains on your credit report for seven years after the date it was filed. A Chapter 7 bankruptcy, where you pay down none of the debt included in the filing, will remain on your credit report for ten years.… read full answer
While it may take a long time for a bankruptcy to fall off of your report, the impact of the bankruptcy will diminish over time. The sooner you begin re-establishing credit in good standing, the sooner your score will rebound. You can find some additional tips on how to rebuild credit here: /edu/cc/rebuild-credit/19613.
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