Bankruptcy is disastrous for your credit score, but it’s not an irrecoverable disaster. However, that optimism needs to be tempered; it can take years to improve your credit score after you declare bankruptcy.
To begin improving your credit, you’ll need two things: advice and information. You can get the former from a credit repair expert or specialist. Go with a good credit repair expert. For the latter, unfortunately, the internet is flush with many misconceptions and myths regarding bankruptcies. We’ve listed some of them, so you can avoid pitfalls on your way to a better credit score.
The good credit misconception is that positive (or at least no negative) information on your credit report will weaken the bankruptcy’s impact on your credit score. In reality, you probably have a better chance of successfully wrestling an elephant than positive information cushioning a bankruptcy. For at least seven years, bankruptcy information has significantly more staying power than other mitigating information. So, don’t expect your pre-bankruptcy credit history to noticeably soften a bankruptcy’s blow.
The severity myth is that all bankruptcy information remains on your credit report for ten years. In reality, this is only true for chapter 7 bankruptcies, but they’re not the only kind of bankruptcy. Chapter 7 bankruptcies are more harmful to lenders, as they involve forgiving many debts. Since they’re more harmful, chapter 7 bankruptcies have worse consequences. In contrast, chapter 13 bankruptcy isn’t as harmful to lenders, and, accordingly, it remains on your report for seven years.
Credit Cards and Loans
This myth doesn’t have a name, but it states that people who have filed for bankruptcy can’t get credit cards or loans. In reality, this is a pretty blatant lie.
Many loan and credit card options are available to those who have filed for bankruptcy to help them rebuild their credit.
Credit-builder loans and secured credit cards are just two credit options available to people who have filed for bankruptcy.
Both are secured with upfront deposits and help build credit like their regular counterparts.
The myth states that it’s impossible to improve your credit with this information on your credit report. This isn’t entirely wrong; bankruptcy does negatively affect your credit score. However, bankruptcies don’t repeatedly whale on your credit score.
Once the score takes a hit, you can begin rebuilding your credit. Using credit-builder loans or secured credit cards is one way to improve your credit. Alternatively, make a habit of making punctual payments and remaining within 30% of your credit limit.
With the information in hand, you need the right guidance. Get in touch with our credit repair experts at 007 Credit Agent. We provide credit repair services and programs, as well as business credit consulting and student loan support, in Irvine CA. Begin your credit repair journey with a free consultation with one of our credit repair specialists.