Summary: Your credit report is a passport to lower rates on everything from home loans to insurance. Your credit score needs to be monitored and improved whether you file bankruptcy or not. Bankruptcy will affect your credit, but it gives you a chance you may not have had with debt.

How Does Bankruptcy Affect Your Credit Report?

Probably not as negatively as you think. Several studies have found that most people who file bankruptcy actually receive a higher credit rating with time. Credit agencies are changing the way credit is rated in July 2020. With the new FICO scoring, late payments and balance transfers will have a low rating. In addition, more weight will be given to the history of the debt. Banks may be slow in adopting this new FICO score because of COVID-19.

How Long Will a Bankruptcy Filing Be Reported on Your Credit Report?

Bankruptcy law allows the bankruptcy filing to be reported on your credit report for up to years. As of May 2020, all 3 major credit agencies are publishing that they report:

Chapter 7 bankruptcy – 10 years

Chapter 13 bankruptcy – 7 years unless dismissed without completion, then 10 years

Will I Be Able to Get Credit After Filing Bankruptcy?

Qualifying for new credit after bankruptcy depends on many things:

  • Your income
  • How much debt you have after the bankruptcy, such as home or car payments
  • Whether you pay the debt you still owe after bankruptcy on time
  • What you have done to improve your credit score
  • Market forces that you can’t control – how the economy is and whether the credit market is tight

How Long Before I Can Buy a Home After Filing Bankruptcy?

Purchasing a home after bankruptcy will require some waiting. How long depends on what type of loan you get. If you have a relationship with a local bank, good income, and payment history with the bank, your local bank may not require you to wait.

Most loans are FHA.

FHA Guidelines vary depending on what type of bankruptcy you file:

Chapter 7 – a minimum wait of 2 years

Chapter 13 – no waiting period.

How Long Before I Can Buy a Car After Filing Bankruptcy?

If you have sufficient income and a reasonable amount of debt remaining after the bankruptcy, most people are able to buy a vehicle.

What Can You Do After Filing Bankruptcy to Increase Your Credit Score?

First, you need to obtain a copy of your credit report.

You can get a free copy from all three major credit reporting agencies through Right now, with COVID-19, you can get a copy of your report each week for free!

Review your credit report for errors

After filing bankruptcy, you should review your credit report for errors. Debt that has been discharged (forgiven) should be reported as “0 balance — account included in bankruptcy.” If your discharged debt is showing a balance owed, correct the error. Creditors can report the balance owed until your bankruptcy is complete. Once you finish your bankruptcy, allow enough time (30-45 days after the bankruptcy is done) to give your creditors time to update their report to the credit reporting agencies.

My credit report has errors. What can I do to fix them?

You should be able to minor errors by disputing the error. Follow these steps.

Do I need an attorney to help me fix errors?

Most people are easily able to dispute errors and have them removed. You probably don’t need an attorney unless you are unable to fix the error by disputing. If the error returns after removal, you may need an attorney.

Should I use a credit repair company?

Beware of credit repair scams. Here’s how to recognize a credit repair scam.

Additional Reading

Review our blog posts on the topic of credit for additional information

Return to Wiki