How Long Does A Bankruptcy Stay On Your Credit Report? – Forbes

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When you file for Chapter 7 or Chapter 13 bankruptcytwo of the most common individual bankruptciesit can remain on your credit reports for up to ten years. After a bankruptcy is listed on your reports, it causes serious damage to your credit score until its removed. This means you will likely have trouble qualifying for a mortgage, auto loan or personal loan.

However, the good news is that you can take steps to speed up the credit rebuilding process. Lets take a look at how long both types of bankruptcies remain on your credit reports. Afterward, well walk you through some steps you can take to improve your credit score.

Experian can help raise your FICO Score based on bill payment like your phone, utilities and popular streaming services. Results may vary. See site for more details.

After you file for a Chapter 7 bankruptcy, it remains on your credit reports for up to ten years and youre allowed to discharge some or all of your debts. When you discharge your debts, a lender cant collect the debt and youre no longer responsible for repaying it.

If a discharged debt was reported as delinquent before you filed for bankruptcy, it will fall off of your credit report seven years from the date of delinquency. However, if a debt wasnt reported delinquent before you filed for bankruptcy, it will be removed seven years from the date you filed.

A Chapter 13 bankruptcy stays on your credit reports for up to seven years. Unlike Chapter 7 Bankruptcy, filing for Chapter 13 bankruptcy involves creating a three- to five-year repayment plan for some or all of your debts. After you complete the repayment plan, debts included in the plan are discharged.

If some of your discharged debts were delinquent before filing for this type of bankruptcy, it would fall off your credit report seven years from the date of delinquency. All other discharged debts will fall off of your report at the same time your Chapter 13 bankruptcy falls off.

Since your credit score is based on the information listed on your credit reports, the bankruptcy will impact your score until it is removed. This means a Chapter 7 bankruptcy will impact your score for up to 10 years while a Chapter 13 bankruptcy will impact your score for up to seven years. However, the impact of both types of bankruptcies on your credit score will lessen over time. Plus, If you practice good credit habits, you could see your score recover faster.

Also, how much your credit score decreases depends on how high your score was before filing for bankruptcy. If you had a good to excellent score before filing, this likely means your credit score will drop more than someone who already had a bad credit score.

If your credit has taken a major hit because of bankruptcy, you can rebuild it. Here are five steps you can take.

Related: 7 Easy Ways To Rebuild Your Credit After Bankruptcy

Monitoring your credit report is a good practice because it can help you catch and fix credit reporting errors. After going through bankruptcy, you should review your credit reports from all three credit bureausExperian, Equifax and Transunion. Due to Covid-19, you can view your credit reports for free weekly through April 20, 2022 by visiting AnnualCreditReport.com.

While reviewing your reports, check to see if all accounts that were discharged after completing bankruptcy are listed on your account with a zero balance and indicate that theyve been discharged because of it. Also, make sure that each account listed belongs to you and shows the correct payment status and open and closed dates.

If you spot an error while reviewing your credit reports, dispute it with each credit bureau that includes it by sending a dispute letter by mail, filing an online dispute or contacting the reporting agency by phone.

Payment history is the most important credit factor, which accounts for 35% of your FICO credit score. If you repay any outstanding debts you have on time, it could improve your credit score. However, if you make late payments or default on a loan, your credit score can suffer further damage.

Another key credit score factor is your credit utilization ratioit accounts for 30% of your FICO Score. Your credit utilization ratio measures how much of your credit you use versus how much you have available. For example, if your available credit is $10,000 and you use $2,000, your credit ratio is 20% ($2,000/$10,000).

Although its often recommended that you keep your ratio below 30%, you may be able to rebuild your credit faster by keeping it closer to 0%.

After filing for bankruptcy, its unlikely that you will qualify for a traditional credit card. However, you may qualify for a secured credit card. A secured credit card is a credit card that requires a security depositthis deposit establishes your credit limit.

As you repay your balance, the credit card issuer usually reports your payments to the three credit bureaus. Repaying your balance on time can help you build credit. Once you cancel the card, a credit card provider typically issues you a refund for your deposit.

When shopping for secured credit cards, compare annual fees, minimum deposit amounts and interest rates to secure the best deal.

If you dont want to take out a secured credit card, you can ask a family member or friend who has good credit to add you as an authorized user on one of their credit cards. You may see an increase in your credit score if the issuer reports the cards positive payment history to the three main credit bureaus. However, your score could take a dip if the primary cardholder makes a late payment or maxes out their credit limit.

Depending on which type of bankruptcy you file, it can remain on your credit report for up to ten years. This can negatively impact your ability to access credit for a long time. However, as time passes, its impact on your credit score will lessen. If you want to get a head start on repairing your credit score after bankruptcy, take some of the actions mentioned above.

Experian can help raise your FICO Score based on bill payment like your phone, utilities and popular streaming services. Results may vary. See site for more details.

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How Long Does A Bankruptcy Stay On Your Credit Report? - Forbes