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While it’s hard to say what will happen to your credit score after bankruptcy, based on a simulation conducted by FICO, the credit profiles score in the simulation dropped to about 520-540 points. This means that it will be very difficult for you to obtain any kind of credit. Also, bankruptcy will appear on your credit profile for each creditor and stay there for 7 to 10 years.
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Many banks have policies that prevent you from getting a credit card or checking account unless it’s been more than a year since you filed for bankruptcy. So if you’re considering getting a credit card from your bank, look elsewhere.
A secured credit card is often the answer for anyone who has recently filed for bankruptcy. I say it’s best if you do this as soon as possible after filing for bankruptcy, but you generally need to wait a few months to let your credit report cool off from the sudden shock of bankruptcy. By the 5 month mark, your credit report should have fallen to a baseline and everything that should have been reported should be there now.
How quickly will my credit improve after bankruptcy?
Your credit most likely won’t make any improvements until your bankruptcy is waived. This means that you may not be able to get an unsecured credit card until then. There is a small chance that your score will rise after bankruptcy, but only if you have a lot of debt. The reason for the increase is that any debt you owe will be forgiven, so your active debt ratio will drop significantly, increasing your credit score.
This is the best scenario for some people. Others have experienced a drop to 400 points and have been able to get nothing but a secured credit card with a very low credit limit. At this point, your best bet is to find someone with good credit to add you to their account as a secondary user. This will show their credit payments and balance in your credit report, increasing your score every month.
If you don’t have anyone to add you to their credit card account, the next best step is to try and get a secured credit card with a low credit limit. However, keep in mind that depending on which bankruptcy chapter you filed, you may need to get court approval before doing so.
The reason we recommend going ahead and purchasing a secured card is because it will help you restore your credit. The sooner you can get your credit with a positive history with no missed payments and an available credit card account with low usage, the better it will be for your credit score.
How long does it take to get a 700 score after bankruptcy?
It depends on which bankruptcy chapter you filed. In a Chapter 13 bankruptcy, your credit score should be around 700 about two months after the bankruptcy discharge. This also depends on whether you are working on getting something off your credit that shouldn’t be there. For example, if you have something older than 7 years, you should work on removing those items from your credit report.
If you filed Chapter 7, you may be able to get there much faster, as your layoff won’t last as long as a Chapter 13. Generally it takes years for Chapter 13 to be fired, but a Chapter 7 bankruptcy can usually take a few months will be waived after submission.
This means that a few months after your discharge, you can start removing negative items from your report and apply for a secured credit card to get the juices on your credit report and get that score up.
The best course of action after the discharge of one of your debts is the following:
- Get some secured or unsecured credit cards.
- Use them and pay them in full before the expiration date.
- DO NOT use them between the expiration date and the statement date.
- Rinse and repeat this process until you have 3-5 cards.
- For every bad item on your credit report, offer the collection agency a Good Will letter of Pay In Full, even if it’s included in the bankruptcy.
- Rinse and repeat until each of those items runs out, or your score is over 700.
If you take these steps and repeat them many times, you should have a credit score of over 700 points, some people even report having a score of 800 points depending on how bad their score was before filing for bankruptcy.
What is the average credit score after bankruptcy?
Everyone’s position is a little different, so it’s hard to say what the average credit score is, but based on an article from FICO, the average score is usually around 540 points.
It will be very difficult for someone to get credit right after applying, but there is light at the end of the tunnel. If you are patient and work on the items we discussed in this article, you should be able to have a higher credit score than you did before your bankruptcy.
What happens after bankruptcy?
This is usually everyone’s light at the end of the tunnel. So you’ve paid all your dues and don’t owe anyone anything. You have to go into credit rebuild mode as there is a lot to clean up. It’s best to try and get as many items out of your credit report as possible. If you follow our steps to take after a discharge, you should see your credit score rise in no time.
We know filing for bankruptcy isn’t something to be proud of, but sometimes it’s just what it takes to get yourself out of the debt system that plagues everyone around the world.
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