There are a number of myths surrounding bankruptcy that can scare people away from getting a fresh start and relief from overwhelming debt. One of the most common myths is that your credit score will never recover after filing bankruptcy.
You might think that you’ll never get approved for a mortgage or a car loan after you file for bankruptcy, but this is not true at all.
What Happens To Your Credit After Bankruptcy?
The amount your credit score is impacted will vary depending on a few different circumstances including what your original score was, how much debt you discharged and what type of bankruptcy you file, among other factors. Unfortunately, your credit score will go down at least a little.
While it’s true your credit will take a major hit after filing for bankruptcy, this is not permanent damage. Bankruptcy stays on your credit report for a while, usually seven to 10 years. You may experience limited access to a credit card and low credit scores during this time, but this is not permanent.
When Will My Credit Recover?
Fortunately, you can begin to take steps to rebuild your credit right away. In some cases, your score can begin to recover relatively quickly, depending on the actions you take. Paying your bills on time and opening a low-limit secured credit card account are a few ways to begin repairing your credit score. The sooner you get started, the faster you’ll begin to see improvement.
Additionally, the impact of bankruptcy on your credit score will lessen over time.
While bankruptcy may seem daunting, especially with false or misleading information, it can provide significant relief and a fresh financial start for you and your family. Do not be deterred by its effects on your credit score or other common myths about the process.