Bankruptcy can save you financially, allowing you to get the fresh start you need and recover from a difficult period of time in your life. The downside though is, it can also dramatically impact your credit score.
What Bankruptcy Does To Your Credit
Because bankruptcy is essentially a process of assisted recovery after financial devastation, it doesn’t exactly scream financial responsibility on your credit report. It can actually lower your score dramatically, especially if you had good credit before, and for up to 10 years after you file anyone that looks at your credit for any type of financing or employment purposes will be able to see that you went through the process. As a result, some may choose to pass on opportunities to work with you, or approve certain loans, to avoid any preconceived risk.
What Does Bankruptcy Look Like On Your Credit Report
Although you won’t see the word “bankruptcy” in big, bold, red print across your credit report, it will be apparent that you’ve filed to any potential lenders or employers that come looking. All the debts that were discharged or reorganized as part of the terms of your bankruptcy agreement remain on your credit report. The only difference is that the new balance will say $0, and they will be reported as “included in bankruptcy” or “discharged.”
What You Can Do To Minimize Damage
The most important thing you can do after filing for bankruptcy is to immediately start working on building your credit back up. That means making sure everything is paid on time, rounding up your expenses and paying a little more than what you owe to reduce interest where you can, making sure you’re keeping your credit usage below 30%, and otherwise doing everything you can to boost your credit. Ultimately, the harder you work to bounce back after your bankruptcy, the faster you’ll start to see your credit score climb. In a lot of cases, those who work hard to practice financial responsibility after their bankruptcy achieve an even higher credit score than what they had before their financial challenges started!
Interested in more information on how you can afford a reliable used vehicle post-bankruptcy? Please, feel free to take advantage of our credit specialists’ incredible insight and resources here at Suburban Auto Finance anytime. Our Guaranteed Credit Approval and vast network of associate car dealerships can be all yours – and that’s just the start. All you’ve got to do is spare a little of your time to Apply Now!