Bankruptcy can have a significant impact on your credit score, lasting from seven to ten years until it naturally falls off your credit report. Chapter 13 bankruptcy takes 7 years to clear, while Chapter 7 takes 10 years! Both types of bankruptcy can lower your score by up to 240 points, which is quite significant.
However, there are proactive steps you can take to improve your credit during this period.
Here are five crucial steps to follow until the bankruptcy clears from your credit report:
- Open Two Credit Builder Cards
Payment history plays a substantial role in determining your credit score, accounting for about 35% of the scoring. Opening two credit builder cards and using them responsibly will gradually demonstrate your ability to manage credit and positively impact your score over time.
- Open One Credit Builder Loan
Credit mix is another aspect that affects your credit score, representing around 10% of it. By taking out a credit builder loan and making timely payments, you diversify your credit accounts, which can improve your overall score.
- Leverage a Trusted Friend or Family Member
If possible, ask friends or family members to add you as an authorized user on their old and well-maintained credit cards. This strategy can help you benefit from their positive credit history and boost your own creditworthiness. Just be careful to not be added to an account with late payments or high balances.
- Seek a Co-Signer for a Home, Apartment, or Car
Finding someone willing to co-sign a lease or loan for you demonstrates to creditors that someone with a good credit history believes in your financial responsibility. Though this wouldn’t necessarily be factored into credit scoring, it could provide a confidence boost to other lenders and improve your chances of securing credit when they see it or take it into account for their own internal underwriting guidelines.
- Dispute Inaccurate Accounts
Take the time to review your credit report for any inaccuracies. If you find errors, dispute them with the credit reporting agencies to have them rectified. Correcting these inaccuracies could prevent further negative impact on your score.
The Impact of Bankruptcy Falling Off Your Credit Report
Once a bankruptcy falls off your credit report, you can expect a credit score increase of approximately 50–150 points. However, waiting for seven to ten years for this to happen might be challenging. If you’re eager to expedite the process, consider enlisting the help of a credit repair expert like Texas Credit, who can assist you in finding and disputing any inaccuracies with bankruptcies on your credit reports.
Professional Credit Repair
If you’re feeling overwhelmed by the process or struggling to identify the reasons for your credit score drop, consulting a credit repair professional could be a viable option. These experts can analyze your credit report and work on your behalf to address any discrepancies, saving you time and effort.
Among the reputable credit repair companies, Texas Credit stands out as a company that helps everyday Americans remove inaccurate, incomplete, unverifiable, unauthorized, or fraudulent negative items from their credit reports. Their mission is to empower consumers by providing them with the necessary knowledge and opportunities to achieve their financial dreams. For exceptional customer service and reliable credit repair assistance, reach out to Texas Credit to see how they can help.
Remember, rebuilding your credit after bankruptcy is a gradual process that requires patience and discipline. By following these steps, and seeking professional support if needed, you can pave the way to a brighter financial future.