There is a common belief that filing for bankruptcy will ruin your credit score. Bankruptcy is included on your credit report by the three credit bureaus and will significantly impact your score. However, that impact may be less severe than you imagine. You should consider a few things about bankruptcy and your credit score before filing. Here’s a deeper look at how bankruptcy affects your Saint, Cloud Minnesota credit score.
Bankruptcy Reduces Your Credit Score a Lot
No matter how you look at it, bankruptcy will reduce your credit score by a significant amount. Your credit score is created based on several factors to determine how risky it is to give you credit. Having a bankruptcy in your credit report is a major red flag for creditors, and your score will drop substantially to reflect that risk.
Bankruptcy Will Not Ruin Your Credit Score
While your score will drop, a bankruptcy on your report won’t permanently ruin your credit rating. Credit reports only cover the last seven to ten years, meaning anything older than the limit for each credit bureau will be erased from the report. That means your bankruptcy will be removed from your report in at least ten years, and your number could rise substantially.
You Can Rebuild Your Credit
Even if the bankruptcy is on your credit score, you can rebuild it to a good number. You do this by doing what you should do to build good credit. That includes paying bills on time, using a limited amount of your available credit, and creating a history of positive credit events. If you do this for long enough, you can balance the negatives of bankruptcy on your credit report with the positives of all of the other actions that you have taken.
Credit Counseling After Bankruptcy Can Help
Credit counseling can be an effective way to help you improve your credit score after you file bankruptcy. A counselor works with you to understand how to better manage your credit so that you can raise your score while staying out of debt in the future. Even if bankruptcy successfully pulls you out of debt, credit counseling is a good idea. Continuing with the same process that landed you in so much debt before without a clear understanding of how to fix the problem can lead you back into deep debt. There is a limit to how long after a bankruptcy filing you can file again, so your goal needs to be to stay out of debt and keep whatever debt you acquire to a manageable level.
Get Help With Bankruptcy Filings In Saint Cloud
Bankruptcy is a tool for correcting your finances and helping you move forward without crushing debt. The key is knowing how to manage a bankruptcy filing to get the desired results. You can get help for a bankruptcy filing in Saint Cloud from Kain + Henehan. We specialize in bankruptcy law and have helped many clients like you successfully manage their bankruptcy filings. Contact Kain + Henehan by calling (612) 438-8006 or filling out the online form to discuss your case during a free consultation
