Many people have overwhelming debt from medical bills, late fees, credit card debt, loans and interest. Bankruptcy is a legal process that helps thousands of Americans resolve burdensome financial obligations. People who file for Chapter 7 bankruptcy can often see their debt resolved within six months.
However, one of the biggest disadvantages when filing for bankruptcy is that a filer’s credit score may drop. Many filers may see their credit score drop by 200 points. That is a considerable decrease, which can affect a person’s ability to apply for loans or housing.
There are ways to raise a credit score after filing for bankruptcy. Here is what you should know:
Can your credit score recover after bankruptcy?
Debtors can start increasing their credit score immediately after getting a successful bankruptcy filing. However, it often takes time for debtors to raise their credit scores back to the score they had before bankruptcy.
Debtors can start increasing their credit scores by reviewing their credit reports. A credit report can show what actions could help increase a debtor’s credit score. For example, a credit report shows what debts that are not covered by bankruptcy can be paid off.
Another way to build up a credit score is by opening up new credit card accounts. After bankruptcy, debtors may be offered high-interest credit cards. However, these credit cards can help build up a debtor’s credit score with regular payments. A secured credit card may also allow a creditor to take on debt without worrying about accumulating overwhelming debt.
Legal guidance can help debtors explore their bankruptcy and credit score recovery options.