Rebuilding Your Credit After Bankruptcy

 Posted on January 19, 2023 in Credit Score

If you are concerned about what the process of filing for bankruptcy will do to your credit history – and your credit score by extension – know that you are not alone. Many individuals who are struggling with debt hesitate to seek out debt relief because they are understandably worried about credit-related consequences. The challenging news is that your credit score will drop if you file for bankruptcy. The great news is that your credit score may ultimately benefit from your decision to file for bankruptcy.

Credit Score Building Blocks

When your credit score is calculated, a number of financial factors are taken into account. For example, some weight is given to the kinds of debt you are responsible for (credit mix), whether there have been any recent inquiries into your credit history, and the length of your history. Substantial weight is given to how responsible you have been in repaying your debt on time, the amounts that you owe, and how much of your credit you are using at any given time.

You will want to keep these factors in mind when rebuilding your credit after filing for bankruptcy. If you keep your debt utilization rate low and you consistently pay back your obligations on time, your score will rebound with surprising speed.

The Bankruptcy Boost

Creditors are most interested in the latest financial information provided about a potential borrower. Meaning, if you are responsible with your finances for months—and then years—after you file for bankruptcy, the impact that this filing will have on your future financing prospects will lessen over time. Creditors may even respond positively to your decision to file for bankruptcy if you provide them with evidence that you have used the opportunity to get your financial affairs in order once and for all.

It is also worth noting that if you do not file for bankruptcy and you continue to miss payments and incur late fees, your credit score will not rebound. It will simply continue to sink.

Connect with a Reputable San Antonio Bankruptcy Lawyer to Learn More

If you are seeking financial stability and filing for bankruptcy can help you to achieve that goal, know that you do not need to navigate this process by yourself. The compassionate San Antonio, TX bankruptcy lawyers at Law Offices of Chance M. McGhee can help you to secure meaningful debt relief.

Start the process of filing for bankruptcy today during a confidential, free legal consultation session. You can schedule your no-cost, risk-free appointment now by submitting a contact form on our website or by calling us at 210-342-3400. The process of filing for bankruptcy can be stressful but the benefits that this opportunity can provide once your case is closed may be well-worth your effort. We look forward to speaking with you.

Source:

https://files.consumerfinance.gov/f/documents/cfpb_how-to-rebuild-your-credit.pdf