Filing for bankruptcy will have an immediate negative impact on your credit score, but the long-term effects could be positive if you follow a few simple guidelines.
According to a common bankruptcy myth, people who file for bankruptcy will never have good credit again. This is false in most cases. In fact, bankruptcy can open the door to new credit opportunities that were not available before you filed.
Creditors understand that you can only file for Chapter 7 bankruptcy only once every eight years. For this reason, you may receive many credit card offers shortly after your bankruptcy discharge - they know you cannot use bankruptcy to discharge your new debt.
The interest rates on these new credit cards may not be favorable, but you have to start somewhere. You can gradually improve your credit history by following a few simple guidelines:
- Use your credit card to pay for everyday items you would buy anyway - groceries, gas, etc.
- Do not buy anything you cannot afford
- Pay the entire balance every month
- Always pay on time
By building a good credit history after bankruptcy, you can eventually obtain larger lines of credit, and even qualify for a car or home loan in time. For most people who file for bankruptcy, it is a one-time event. Once your bankruptcy - and debt - are behind you, you can focus on making the most of your clean financial slate.
For specific information on how bankruptcy can affect your credit, talk to an experienced Minnesota bankruptcy lawyer.