How long does bankruptcy stay on your credit report? – Councilor Forbes


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When you file for Chapter 7 or Chapter 13 bankruptcy, two of the most common individual bankruptcies, it can stay on your credit reports for up to ten years. Once a bankruptcy is listed in your reports, it causes serious damage to your credit score until it is removed. This means that you will likely have a hard time qualifying for a mortgage, car loan, or personal loan.

However, the good news is that there are steps you can take to speed up the credit rebuilding process. Let’s take a look at how long the two types of bankruptcies stay on your credit reports. Next, we’ll walk you through some steps you can take to improve your credit score.

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How Long Does Chapter 7 Bankruptcy Stay On Your Credit Report?

After you file for Chapter 7 bankruptcy, it stays on your credit reports for up to ten years and you are allowed to pay off some or all of your debts. When you pay off your debts, a lender cannot collect the debt and you are no longer responsible for paying it off.

If a discharged debt was reported as past due before you file for bankruptcy online, it will disappear from your credit report seven years from the date of delinquency. However, if a debt was not declared past due before you filed for bankruptcy, it will be deleted seven years from the date you filed.

How Long Does a Chapter 13 Bankruptcy Stay on Your Credit Report?

A Chapter 13 bankruptcy stays on your credit reports for up to seven years. Unlike Chapter 7 bankruptcy, filing for Chapter 13 bankruptcy involves creating a three to five year repayment plan for some or all of your debts. Once the repayment plan is completed, the debts included in the plan are discharged.

If some of your discharged debts were past due before you filed for this type of bankruptcy, they would drop off your credit report seven years from the date of delinquency. All other discharged debts will disappear from your report at the same time your Chapter 13 bankruptcy falls.

How long do bankruptcies impact your credit scores

Since your credit score is based on the information on your credit reports, bankruptcy will impact your score until it is removed. This means that a Chapter 7 bankruptcy will impact your score for up to 10 years while a Chapter 13 bankruptcy will impact your score for up to seven years. However, the impact of both types of bankruptcy on your credit score will decrease over time. Plus, if you practice good credit habits, you may see your score recover faster.

In addition, the decrease in your credit score depends on the state of your score before filing for bankruptcy. If you had a good to excellent rating before you filed, it likely means that your credit rating will drop more than that of someone who already had a bad credit rating.

5 tips for rebuilding your credit after bankruptcy

If your credit has taken a hard hit because of bankruptcy, you can rebuild it. Here are five steps you can take.

Related: 7 easy ways to rebuild your credit after bankruptcy

1. Examine your credit reports

Monitoring your credit report is a good practice because it can help you find and correct credit report errors. After declaring bankruptcy, you should examine your credit reports from the three credit bureaus: Experian, Equifax, and Transunion. Due to Covid-19, you can view your credit reports for free every week until April 20, 2022 by visiting AnnualCreditReport.com.

When reviewing your reports, check to see if any accounts that were released after bankruptcy are listed on your account with a zero balance and indicate that they were released because of it. Also, make sure that each account listed is yours and shows the correct payment status along with the opened and closed dates.

If you spot an error while reviewing your credit reports, dispute it with each credit bureau that includes it by sending a dispute letter by mail, filing a dispute online, or contacting the agency. evaluation by phone.

2. Never miss a payment

Payment history is the most important credit factor, accounting for 35% of your FICO credit score. Paying off your unpaid debts on time could improve your credit score. However, if you make late payments or default on a loan, your credit score can suffer further damage.

3. Keep your credit utilization rate low

Your credit utilization rate is another key factor in your credit score. It represents 30% of your FICO score. Your credit utilization rate measures how much credit you use versus how much you have. For example, if your available credit is $ 10,000 and you are using $ 2,000, your credit ratio is 20% ($ 2,000 / $ 10,000).

While it’s often recommended that you keep your ratio below 30%, you may be able to rebuild your credit faster by keeping it closer to 0%.

4. Consider applying for a secured credit card

After you file for bankruptcy, you are unlikely to qualify for a traditional credit card. However, you can benefit from a secured credit card. A secured credit card is a credit card that requires a security deposit. This deposit establishes your credit limit.

When you pay off your balance, the credit card issuer usually reports your payments to the three credit bureaus. Paying off your balance on time can help you build up credit. Once you cancel the card, a credit card provider will usually refund your deposit.

When shopping for secure credit cards, compare annual fees, minimum deposit amounts, and interest rates to get the best deal.

5. Become an authorized user on a credit card

If you don’t want to subscribe to a secured credit card, you can ask a family member or friend who has good credit to add you as an authorized user on one of their credit cards. You may see an increase in your credit score if the issuer reports the card’s positive payment history to the three major credit bureaus. However, your score could drop if the primary cardholder makes a late payment or exceeds their credit limit.

Final result

Depending on the type of bankruptcy you file, it can stay on your credit report for up to ten years. This can negatively impact your ability to access credit for a long time. However, over time, its impact on your credit score will decrease. If you want to get a head start on repairing your credit score after bankruptcy, take some of the steps mentioned above.

Increase your FICO® score instantly with Experian Boost ™

Experian can help you increase your FICO® score based on paying bills like your phone, utilities, and popular streaming services. Results may vary. See the site for more details.

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