Chapter 7 offers a fresh start, but can you secure new credit with reasonable interest rates after bankruptcy?
How long it takes to recover from bankruptcies depends on your credit score before bankruptcy and what you do afterward.
At Blake Goodman, PC, Attorney, we guide every client through the steps to restore their credit quickly with our 720 Credit Rebuild Program.
How Long Does Chapter 7 Bankruptcy Stay on My Credit Report?
Bankruptcy can appear on your credit report for up to 10 years. Still, you can start rebuilding your credit right away.
Chapter 7 bankruptcies usually take only a few months to complete. We’ve seen clients successfully apply for vehicle financing immediately after receiving their discharge.
By following a financial recovery plan, our clients have obtained credit cards or unsecured loans regardless of the bankruptcy on their credit report.
How Long Does It Take for My Credit Score to Recover from Bankruptcy?
Your credit score is a number between 300 to 800, assigned to represent your creditworthiness. Credit bureaus calculate your credit score using information from your credit report, which includes:
- Payment history,
- Outstanding balances,
- Credit history length,
- New credit account applications, and
- Credit types (mortgages, car loans, and credit cards).
A bankruptcy negatively affects your credit score. An average score of 680 could drop by 130 to 150 points. An excellent score above 780 may lose between 200 and 240 points.
However, most people who file bankruptcy are struggling to pay bills, so their credit score is already poor. Chapter 7 bankruptcy stops the discharged debt from counting as a negative mark, leaving only the bankruptcy.
People with scores from 400 to 500 report increases of up to 50 points after filing for bankruptcy.
How To Recover from Bankruptcy—Chapter 7
So, how long does it take to recover from bankruptcies? The answer depends on what you do after your bankruptcy. It only takes a few small steps to improve your credit score, and now is the best time to start.
One study found that 65% of people have a credit score above 640 within two years of filing for bankruptcy. Here are some things to do today.
1. Check Your Credit Report
While you can’t control how long your bankruptcy stays on your credit report, you can take action if you see errors on your report. Monthly reports can help you monitor how you use your credit after bankruptcy.
2. Pay Your Bills on Time
Paying your bills on time signifies good financial health. Sometimes utility companies or rental agencies can report payments to credit bureaus.
3. Limit Your Credit Usage
Being disciplined with your credit is the best approach after bankruptcy. Having one credit card or loan to maintain makes it easier to keep up with payments.
4. Follow a Financial Recovery Plan Developed by Professionals
For this step, we invite you to allow us to help.
Contact an Experienced Bankruptcy Attorney Today
Everyone deserves a home mortgage or car loan with an affordable interest rate. Through our 720 Credit Rebuild Program, you can rebound to a 720+ score in as little as 12 to 24 months and fully embrace your fresh start.
So contact us today, and let us help you on your road to recovery.