When filing for bankruptcy, it is important to understand that it can hurt your credit score. Once your debts have been discharged you may feel relieved. However, filing for bankruptcy will cause your credit score to drop which will make it difficult for you to obtain loans. Post-bankruptcy, it is important to take the necessary steps to rebuild your credit. Keep reading to learn how you can improve your credit score and discover how a trusted Newburgh Bankruptcy Lawyer can help you set yourself up for financial success after filing for bankruptcy.
How will bankruptcy affect my credit score?
Before you file for bankruptcy, you should first understand the consequences which include your credit score dropping drastically. Filing for bankruptcy can affect your credit score for as long as ten years depending on the specific type of bankruptcy you file. Everyone’s financial circumstances are different. Therefore, depending on what your credit score was before filing, your score will decrease significantly from the original score. Typically, if you have a poor credit score to begin with or an average score of 680, your credit score after filing will likely plunge between 130 and 150 points. If you had an above-average credit score, you would likely lose 200 points. Ultimately, your credit score will drop significantly after filing.
How can I rebuild my credit?
Although your credit score will drop significantly after filing for bankruptcy, there are ways to improve your score to get it back up. Once your debt has officially been discharged, you must not make the same financial mistakes as before. Essentially, you must adopt better spending habits and develop a spending strategy. You should create a budget to ensure you do not accrue debts that you are unable to pay. In addition, you can improve your credit by only having one secured credit card. Paying one credit card monthly statement in full will help you effectively rebuild your credit. If you have too many credit cards to pay each month, you may accidentally miss a payment or not be able to pay it in full. If you have student loan debt, you should continue making payments as they most likely will not be discharged through bankruptcy. Another habit you should adopt is paying off any bills that have accumulated before the due date. Moreover, you should monitor your credit to ensure the methods you have adopted are actually working and improving your credit gradually. Furthermore, you may want to take out a credit-builder loan. If you need money to repay your loans, some banks and credit unions will offer loans with lower interest rates to help you pay off your debts. If you consistently make payments, this can help you rebuild and improve your credit.
For more information on how bankruptcy will affect your credit score, contact a determined Newburgh bankruptcy lawyer. Our firm will work tirelessly to help you navigate the complexities associated with this situation. Allow our dedicated team members to help you get back on your feet after filing for bankruptcy.