When you file for bankruptcy, one of the things to remember is that the bankruptcy affects your credit for a specific number of years. Whether you file for Chapter 13 or 7 bankruptcy, it remains on your credit report for up to 10 years. This will hurt your credit, at least in the short-term, and could impact your ability to get loans , mortgages or other forms of credit.
The good news is that you have the option to improve your credit even though you have a bankruptcy on file. Understanding how long a bankruptcy will adversely affect your credit history can help you take the right steps to repair your credit.
Chapters 7 and 13 bankruptcies
With a Chapter 7 bankruptcy, you can expect the bankruptcy to remain on your credit report for approximately 10 years. The timeframe for a ding against the credit of those filing for bankruptcy under Chapter 13 is also typically a decade.
How can you start to repair your credit?
Right away, you have some options to start repairing your credit. Make all your payments on time and in full. You should also keep your credit utilization rate low, so if you do take out a new credit card, do not run it up to its limit. Just having available credit can help improve your credit score as long as you pay off the balance each month.
A secured credit card is often a good way to start rebuilding your credit. Put the money down on the card that you’ll borrow against. For example, if you want $1,000 in credit, give the company $1,000 and then use the card. That way, if you ever default, your initial deposit can be used to pay off the debt.
These tips can help you improve your credit while you wait for your bankruptcy to no longer show up on your credit report. Putting the tips you learned at your mandatory credit counseling to work for you is another good idea.