When Can I Get a Bankruptcy Off My Credit Report?
A bankruptcy can remain on your credit report for up to ten years from the filing date of Chapter 7 bankruptcy or up to seven years from the filing date of Chapter 13 bankruptcy. However, its impact on your credit score lessens over time as you rebuild your credit with responsible financial behavior.
While bankruptcy may be a last resort, there are times where filing bankruptcy might make sense. Before you make this decision, it’s important to understand the impact a bankruptcy can have on your credit and how long it remains on your credit report. You’ll also want to know when and how to remove bankruptcies from credit reports.
This guide provides more information about bankruptcies and the impact a bankruptcy could have on your financial future.
Types of Bankruptcies
There are two primary types of consumer bankruptcies: Chapter 7 and Chapter 13.
Chapter 7
A Chapter 7 bankruptcy is a full liquidation of your assets. All eligible debts are settled and no repayment plan is put in place. Depending on your specific situation, you could walk away from a Chapter 7 bankruptcy without any remaining debt.
However, 7 bankruptcies can remain on your credit report and affect your credit for up to 10 years from the date of filing.
Chapter 13
While some of your debt will be resolved with a Chapter 13 bankruptcy, you’ll still have to repay a portion of your overdue balances. This type of bankruptcy restructures your debt and can force your creditors to settle for a reduced amount. The court sets up a repayment plan that typically stretches over three to five years.
Chapter 13 bankruptcies can remain on your credit report for up to seven years from the date of filing. At this point, the bankruptcy should be removed from your credit report.
How to Remove a Bankruptcy From Your Credit Report
Once your bankruptcy is officially filed through the courts, it typically cannot be removed from your credit reports earlier than the seven- or 10-year time frame unless it contains errors or was reported incorrectly.
Be sure to review the details of your bankruptcy on your credit reports. Make sure all the information is correct, such as your name, Social Security number, personal information, and filing date. If you note any mistakes about your bankruptcy on any of your credit reports, you can file a dispute with the relevant credit bureaus.
Once you file a dispute, the credit bureaus have 30 to 45 days to verify and validate the information. If they fail to do so, they should remove the bankruptcy from your credit reports.
When Can You Get Credit Again?
While your bankruptcy will remain on your credit report for seven or 10 years, this doesn’t mean you have to wait that long to get credit again. In fact, some creditors may be willing to work with you just a few years after a bankruptcy. For example, you may qualify for a secured credit card in just a few short years. However, you may face higher-than-average interest rates.
The important thing is to refrain from falling back into the habits that may have led to your bankruptcy. This means setting and following firm budget constraints. Next, you’ll want to start rebuilding your credit as soon as possible.
Tips for Rebuilding Your Credit
While you don’t want to file for bankruptcy unless you absolutely must, it does provide a chance to start over. There’s a good likelihood that you also have missed payments and account defaults on your credit report, which are what led you to file for bankruptcy in the first place. These negative items could also remain on your credit report for up to seven years.
Fortunately, during this time, you can work to rebuild your credit. Here are some tips to help you get started.
Check Your Credit Score
The first step to rebuilding your credit is assessing your current financial state. Use Credit.com’s free credit report card to get an overview of your situation. Then, check the report for accuracy, and challenge any errors you may find.
If any unresolved issues on your credit score aren’t covered under your bankruptcy, create a plan to pay this debt off as quickly as possible or contact the creditor to negotiate a payment deal. Be sure to check your credit reports frequently so you can immediately address any issues that arise.
Set a Firm Budget
One of the best ways to get control of your finances and prevent overspending is to set a firm budget. First, determine your monthly net income. Next, calculate your expenses. Do your best to set a budget that utilizes no more than 80% of your net income.
This practice allows you to put up to 20% of your income into an emergency savings fund. This safety net can prevent missed payments in the future.
Commit to On-Time Payments
Your payment history accounts for up to 35% of your overall FICO® credit score. If you want to start rebuilding your credit, it’s crucial you make your payments on time, every time. Creating a budget and making a commitment to stick to this budget can help.
Make the Most of Your Payments
Unfortunately, some of your most common monthly payments, such as your rent and utilities, aren’t always reported to the credit reporting agencies. This means you’re not getting credit for making these payments. Credit.com’s ExtraCredit® Build It program can help you make the most of every payment. Sign up today to start getting credit for things like rental payments and utility bills.
Acquire a Credit Card
After some time has passed and you’ve taken steps to rebuild your credit, you may qualify for a new credit card. Start your search with a secured credit card. This step can help improve your credit by diversifying your credit mix and helping you add to your positive payment history.
While filing for bankruptcy can have significant consequences, it won’t impact your credit forever. As long as you take steps to improve your spending habits and rebuild your credit, you may find creditors willing to work with you after just a few years. Take the first step by checking your free credit score today.