Michael D. Hart, P.C.

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Building good credit after bankruptcy

| Feb 7, 2018 | Chapter 7 Bankruptcy |

Virginia consumers who have ever filed for bankruptcy or are considering it might assume that it ruins their chances of ever having good credit again. But in actual fact, there is a time limit for bankruptcy to remain on a person’s credit report, and when it is removed, rebuilding credit to the good score range is quite possible. Not all negative information remains on a credit report for the same amount of time. Late payments remain for seven years, as does Chapter 13 bankruptcy. But Chapter 7 bankruptcy remains for 10 years.

When bankruptcy first appears on someone’s credit report, it can knock about 200 points off the credit score. But when the bankruptcy is finally removed, the credit score does not immediately jump back up. It could take people a few years of work at building their credit to see a significant improvement.

Raising a credit score involves having and using credit but being responsible with it. One tip for getting a low credit score back on track is to get a secured credit card. Making on time payments every month is essential to keeping the credit score from being negatively impacted again. Another thing that has a high impact is credit utilization, or the percentage of total credit that a person is using. To keep a credit score from lowering, it is advised that people use only around 25 percent of their total credit limit.

There are a variety of eligibility and other requirements associated with a Chapter 7 bankruptcy filing. An attorney can summarize them when exploring the debt relief options that might be available to a client.