Bankruptcy is usually not an instantaneous thing but a gradual process. The debtor initiates the process by filling the application and the courts impose it. This is an extreme situation that has very severe negative consequences on your credit score. This should be the last resort after evaluating all other possible solutions of dealing and sorting your financial situations.
Most people look at the possibility of their loans and debts being written off, ignoring the time and costs of the process. On bankruptcy, the credit score is totally damaged and it can go to the lowest credit score possible as per the credit scale being used.
Bankruptcy credit report
At this particular time, there is no proof of ability to service loans and bills. Afterwards, it requires so much effort to repair the damage caused by filling for bankruptcy. There are some several things that you can expect to happen to your credit score on filling for bankruptcy, including and not limited to:
Plummet of credit scores
The minute you decide to file for bankruptcy, it is good to have in mind that, your credit score will have a steep and drastic fall. Most of the time it has been recorded to be of between 200 – 300 points or more from the initial. From the credit basics, we understand that 1 point on your credit score really matters and therefore, a 200 points fall is really a big deal. It may take you very many years to repair the damage.
Credit report long-term damage
Bankruptcy information on your credit report is like a red stain spot on a white garment. It is almost a permanent red alert on your credit report, scaring away credit providers. By law, bankruptcy information remains on your credit report for 7-10 years, depending on the severity and effects of the bankruptcy. Referencing to the bankruptcy information for at least 7 years means that the information will always be considered in making decisions not only by credit providers but also to any interested parties.
Negative effect diminishes with time
Yes, the bankruptcy information will be considered for as long as it appears on your credit report, but the good news is that, the impact on your credit score reduces overtime. It acts like a jail term, the more years you have served of your term, the better you are and the closer you are to freedom. The newer the bankruptcy information on your credit report, the more severe the impact is on your credit score.
Remove bankruptcy from credit report
Assuming the damage has already occurred, how to savage you from the predicament is what really matters. There is a way out of it all, but it requires dedication and a lot of patience. Bankruptcy credit repair involves several things and actions to help reinstate you to your desired credit score. Below are some tested corrective measures.
Immediately after the damage on your credit report due to bankruptcy, it is advisable to get secured loans. These loans require tangible collateral for approval. Proper and timely servicing of these loans will rebuild your credit worthiness and credit score slowly but steadily. Short-term loans are better as they require shorter time to furnish and result to positive comments. This is a sure way of repairing and rebuilding a credit report and score affected by bankruptcy.
These are short-termloans, which you can get and pay on installments. They considerably take shorter time to service, earning positive comments and feedback on full payment. However, after 7 years, the law requires that all the bankruptcy information be removed from your credit report, completely scraping the negative effect.
Bankruptcy is thus, a major damage factor to your credit report but it can be repaired. Kindly do not file for bankruptcy if you don’t have to, because it’s a rough and bumpy ride, with nothing to be desired.