Many consumers who are facing bankruptcy wonder what declaring bankruptcy will do to their credit ratings. After all, most of us only know that after bankruptcy credit ratings are low, but we do not know what we can do to fix the problem. Is bankruptcy the end of your credit rating forever, or can you dig your way out of the financial mess you are in after bankruptcy?
One important thing to remember when considering your after bankruptcy credit rating is the fact that your current financial problems are already having a significant impact on your credit score. After all, you would not be considering filing bankruptcy if you were not already suffering from credit problems. Your late payments, huge amounts of debts, and default loans are all on your credit rating and are already lowering it.
Bankruptcy does stay on your credit rating for a while, but not forever. While the law allows bankruptcy to stay on your credit rating for 10 years, the credit reporting agencies often remove the information after just 7 years. While declaring bankruptcy does make it difficult to qualify for credit, loans, or even rental agreements, it does free you from the payments and late fees on your current debts, giving you the chance to fix your finances and start saving again.
Believe it or not, some lenders will even look at your after bankruptcy credit report as a positive thing. While your rating is low, they realize that the fact that your bankruptcy has discharged your debts gives you more money to pay towards a future loan. You can often find lenders who are willing to work with you after bankruptcy if you can prove that you are on better financial ground than you were before.
The bottom line is that bankruptcy has a huge impact on your credit rating, but it is not a permanent devastation of your financial future. If you work hard and save money, you can dig yourself out of the hole you have created. Just avoid the temptation to use bankruptcy as a chance to begin your poor borrowing habits again. If you change your spending habits, you can repair your after bankruptcy credit rating.
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