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I Have a Good Credit Score but Am Considering Bankruptcy. How Much Will It Damage My Credit Score and When Can I Rebuild It to Where It is Now?

I’m sorry to hear you are facing bankruptcy, especially if you have a good credit score. Bankruptcy is something most people do not take lightly, and if you have a good credit score, it’s likely that you have been responsible with your money in the past. In some cases, unforeseen circumstances, like a major medical event, can force people with good credit scores to consider bankruptcy.

Bankruptcies can affect access to new credit cards, car and home loans, and can hurt job opportunities. They can also be very tough to deal with emotionally. Despite that, over a million people file for bankruptcy on average every year. Bankruptcies can remain on your credit report for up to 10 years and can knock hundreds of points off your credit score. However, there are steps you can take to boost your credit score and improve it to the point you qualify for loans again, even before the bankruptcy drops off your credit report.

First, in order to become credit-worthy again,

you need to be honest with yourself about why you ended up filing for bankruptcy in the first place. If you do not do an examination of what got you to that point, you are likely to end up there again. Perhaps you were overspending, or maybe you did not carry health insurance that could have helped with those medical issues. Once you are able to identify the problem, you can take steps to prevent it from affecting you in the future.

Next, after filing for bankruptcy,

you should check your credit report. Although your score should have dropped a lot, there could also be errors on your report that could hurt your score even more. If you do find errors, contact the credit bureaus. Fixing those errors could boost your score by a few points.

Although it’s probably tempting after a bankruptcy to avoid getting credit entirely, you should consider obtaining a secured credit card. A secured credit card is secured by a savings account or another deposit account, and the credit line is based on what is in the account. Once you begin making payments reliably and can show that you are creditworthy again, you will be able to get an unsecured card.

After a couple of years of reliably making payments on the credit card, you should qualify for an automobile loan. Automobile loans are secured by the car, so lenders may be willing to give loans to people with less than perfect credit. You will need to be careful and not overpay in interest, however, just because you want to rebuild your credit.

After some time has passed, you should have a number of different credit lines. If you have different types of credit accounts, that mix is likely to boost your score. Do not open too many accounts all at once, however, because that could lower the age of your credit accounts.

Finally, be patient.

Although it’s normal to want your credit score fixed within months after the bankruptcy, that is not realistic. Work hard on your score, be patient, and it’s likely it will improve quite a bit with time.

If you are considering a bankruptcy, call the Atlanta bankruptcy attorneys at Holston & Huntley. Call us today- consultations are free and you are under no obligation to use our services. We serve Metro Atlanta Georgia as well as Birmingham Alabama including surrounding areas.

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