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The most frequent justification given for filing for bankruptcy is the financial difficulties brought on by unforeseen occurrences like job loss and health problems.
According to the website of the credit scoring model FICO, “a bankruptcy will always be regarded an extremely unfavourable occurrence by your FICO Score.” The basic conclusion is that as long as a bankruptcy filing is posted on your credit report, it will harm your credit rating for generations to follow.
“Bankruptcies can harm your credit score and prevent you from obtaining more loans since creditors are hesitant of giving to someone who has a history of nonpayment,” Danielle Harrison, a certified financial planner in Columbia, MO, told Select.
How long do bankruptcies stay on your credit report?
According to the website of the credit scoring model FICO, “a bankruptcy will always be regarded an extremely unfavourable occurrence by your FICO Score.” The basic conclusion is that as long as a bankruptcy filing is posted on your credit report, it will harm your credit rating for generations to follow.
Below, Harrison discusses how long individuals may anticipate bankruptcy filings to linger on their credit records and how they affect your credit score.
Harrison refers to Chapter 13 bankruptcy as the “wage earner’s bankruptcy.” This type of filing provides a payment plan for people who have the ability to settle their obligations, but not always on time.
Online estimates from sources like debt.org demonstrate how filing for bankruptcy will affect individuals with various credit ratings. A person with a credit score of 780 or more would suffer a 200–240 point hit, whereas someone with a score of 680 would drop 130–150 points.
How to reestablish your credit
After declaring bankruptcy, you’ll want to look into strategies to improve your credit score and qualify for better financing alternatives – and that starts with restoring your credit.
You may not be able to qualify for the finest credit cards right away, but there are alternatives that are available to those with less-than-perfect credit.
It is essential to counsel with an experienced attorney before filing for bankruptcy; to get in touch with a reputable company, contact Recovery Law Group using this link:
https://recoverylawgroup.com/bankruptcy/
A deposit (typically $200) is required for secured credit cards, which serves as your credit limit. If you make your credit card payments on this new secured card on time and in full, you will have a better chance of qualifying for an unsecured credit card in the near future.
Another alternative with no annual charge is the Citi Secured Mastercard. The $200 security deposit that is needed becomes your credit limit. Citi’s exclusive entertainment access, which offers first access to pre sales and first-class seats for events like concerts and sporting events, is also available to cardholders.
Be cautious to pay all of your payments promptly and in full each month after you acquire a new credit card so you can begin building your credit.