One of the most concerning risks about filing for bankruptcy is its effect on your credit score. Although your credit has probably already taken a hit if you think bankruptcy is necessary, it is common for people to feel frightened about what bankruptcy could mean for their dreams of owning a home or their financial solvency.
Many households require some amount of revolving credit, like credit cards, in order to meet all of their monthly obligations. Knowing what credit you can likely qualify for after you file for bankruptcy can help you more reasonably assess whether this process is right for you.
People can get new credit cards within weeks of their discharge
In a successful bankruptcy filing, the courts will discharge the balance on your credit card, a process that also involved closing those accounts. The credit card you currently have will likely all clothes, and the lenders are unlikely to immediately offer you another line of credit. After all, they have just lost money from your discharge.
However, bankruptcy actually makes you appealing to some credit card companies. They can charge you higher interest rates, and they know you can’t file for bankruptcy again for some time. You can likely secure a secured line of credit within weeks after your discharge. Cards with mediocre terms, like high interest rates and low credit lines, will often make offers to those who have recently had a bankruptcy.
You can qualify for big purchases in a year or two
Starting to rebuild your credit with a new credit card right after your discharge can put you in a position to get better credit terms in the near future. Some lenders will approve vehicle loans within a few months after a bankruptcy, but most people will find that their best option for buying big items will involve waiting at least two years after their discharge.
At that point, you may be able to get slightly better terms for a vehicle loan or possibly qualify for a mortgage. The closer you come to the end of the reporting. For your bankruptcy, the less of an impact that it will have on your creditworthiness. Many people find that their credit is at a better point within three or four years of bankruptcy than it was prior to filing.
If you are careful with your finances after your discharge, you can possibly have a higher credit score before the bankruptcy even comes off of your credit report. You shouldn’t let fears about credit issues stop you from using bankruptcy to regain control over your finances.