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3 Things Bankruptcy Does to Your Credit Score

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3 Things Bankruptcy Does to Your Credit Score

Filing bankruptcy hurts your credit score in some big ways. Here are a few you should keep in mind before deciding to file for bankruptcy.

Bankruptcy Causes Your Credit Score to Plummet

There is no way to underestimate the impact a bankruptcy has on your credit scores. It is one of the worst things you can do to your scores. A bankruptcy can make your credit scores plummet by 200 points or more.

A Bankruptcy on your Credit Report Causes Long-Term Damage

Having bankruptcy information listed on your credit report will impact your credit for years.

The public record of a Chapter 7 bankruptcy stays on your credit report for 10 years.

Any other bankruptcy references remain in your credit file for seven years including:

  • Chapter 13 public record items
  • Any accounts included in a bankruptcy
  • Third-party collection debts, judgements and tax liens discharged through a bankruptcy

The Negative Impact on your Credit Diminishes Over Time

When rebuilding your credit after a bankruptcy, remember that time is on your side. Bankruptcy information will be considered in your credit scores for as long as it appears on your credit report, but its impact on your score lessens over time.

The newer the bankruptcy information the more powerful the impact it has on your credit scores. A year (or two or three) after the date a bankruptcy first appears on your credit report, its impact will shrink until eventually, the bankruptcy information is removed from your credit report altogether and is no longer a factor in your credit scores.

You can monitor your progress in rebuilding your credit after bankruptcy with’s free Credit Report Card. It updates your credit scores every month so you can track your improvement and see how your credit score inches up afterwards.

To rehabilitate your credit after a bankruptcy, build a positive credit history using secured credit cards and installment loans and make on-time payments on all credit and loan accounts.

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  • Connie

    I had Chapter 11 in 2012. I’ve been approved 4 loans last year and I just paid off 3 June 30. My credit score, as I know and I don’t want to sign up for free credit score because I’m debited monthly thereafter, (tricky???). Could you roughly say I could qualify for a $10K-$15K 5yr personal loan? my total income monthly (pensions and rental income) is $6000.

    • Gerri Detweiler

      Connie – You can get a truly free credit score at You don’t have to provide a credit card number so there is nothing to cancel. Check your scores there (you’ll get two) and if you are in the mid to high 600s or above there’s a good chance there are loan options for you.

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