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Understanding The Availability Of Credit And Credit Scores After Bankruptcy

If you have filed for bankruptcy, you are probably wondering how it is going to affect your credit. You must also be concerned about when you will be in a position to get new credit. All these depend on the bankruptcy chapter under which you have filed. Many times people file for chapter 13 or 7. Here, we are going to look at the impacts of a bankruptcy status on credit availability as well as the status of credit cards after bankruptcy.

Credit availability

With a bankruptcy record on your credit, providers view you as risk partly because you cannot file for bankruptcy again. So, your credibility will be reflected in your income as well as the priority non-dischargeable debts you owe. If your income exceeds your expenses most of the time, credit repair after bankruptcy should be pretty fast. You require a savings and checking accounts to reduce the risk of default. Savings may not affect your credit scores directly, but it will be like a cushion for emergencies especially when making timely payments. Establishing new credit doesn’t necessitate applying for new credit cards. Too many credit cards can lower your credit scores and reduce your credit limit. So, the best thing to do is to use a debit card more often for shopping. A new credit is necessary if you want to raise the credit score, something you cannot get with bankruptcy status on your files. This is where two bankruptcy chapters differ.

Credit scores

If you had a higher credit score before filing for bankruptcy, it is more likely to go down to a greater extent. In a nutshell, bankruptcy status has infinitesimal effects on credit score once you start building it. The only sure thing is that bankruptcy can help your financial status because you will have the urgency to lower the debts and improve your credit gradually. Your credit scores depend on your last 2 years financial records. The most recent information plays a more significant role, and if you are wise, you should raise the score during the first year after bankruptcy.

If you have filed under chapter 7, your valuable assets will be used to settle down the standing debts, and every income you earn after bankruptcy is all yours. This process requires about half a year before you are discharged. Filing under chapter 13 could save your credit scores better. You can acquire new credit till your debts are discharged. You will be settling your debts with your income, and so you will always be seen as a risky borrower. However, you get a better chance for credit repair after bankruptcy.

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