In today’s capitalist society, a person’s credit score is crucial to financial success as an adult. Those who don’t have a credit history are often given a credit score that sociologists consider harsh. It takes a wide variety of information, including but not limited to outstanding amounts, length of credit history, payment history, and payment punctuality, to arrive at a credit score.
Tucson residents who are thinking about bankruptcy understandably worry that it will have negative repercussions on their credit. Let’s get the facts straight and demystify the impact of bankruptcy on a person’s credit rating.
What happens to your credit rating after bankruptcy? To begin with, it may have the most devastating effect on your credit score of any single financial occurrence. A bankruptcy filing can negatively impact your credit score, though not all of them do. Your score could even go up after bankruptcy.
Another way bankruptcy might harm you is by staying on your credit record for up to ten years after you file. This can be seen as a red flag to potential lenders considering lending to you. Certain creditors automatically reject the application when bankruptcy appears on a credit report.
Let’s focus on calculating how much damage a bankruptcy will do to a person’s credit. The “payment history” section of your credit score will reflect the bankruptcy you filed in Tucson if you successfully did so.
The actual monetary impact on one’s credit score varies from person to person. A person’s credit score falls less drastically after filing for bankruptcy if it is already poor, to begin with. For those who had a high credit score before bankruptcy, the impact will be even more severe. It’s important to remember that most bankruptcies won’t have much of an effect on a person’s credit score because they already have a poor score, to begin with.
The good news is that a bankruptcy filing will only have a short-term impact on a person’s credit rating. Providing the individual does not file for bankruptcy again and takes affirmative action to restore credit, this score will rise over time. Secured credit cards in particular are useful for reestablishing credit following bankruptcy in Tucson.
Everyone thinking about filing for bankruptcy should know that the unfavorable information on their credit report has less of an effect the further back in time it is. This bodes well for those who can wait a few years after filing for bankruptcy before applying for a large loan like a mortgage, car loan, or credit card. Bankruptcies often disappear off credit reports after seven to ten years, meaning they have little to no effect on a person’s credit score beyond that period.
If you defaulted on multiple lines of credit and then filed for bankruptcy, your credit score would be reset and you would be back to where you were financially ten years later. In Tucson, filing for bankruptcy does not prevent you from getting a line of credit before the 7-10 year waiting period. To help consumers who have filed for bankruptcy get back on their feet, several financial institutions now provide secured credit cards and other types of credit with comparable interest rates.
Using such credit lines can help you rebuild your credit history if you make all of your payments on time and in full. To reiterate, it doesn’t matter how high your interest rate is as long as you pay off your bill in full every month.
What you should take away from this article is that there is still hope if you are considering filing for bankruptcy in Tucson. Get in touch with the best bankruptcy lawyer in Tucson to go over your alternatives, keep a positive outlook, and you’ll be able to start over with your money in no time.
Bankruptcy Lawyer Az is one such firm that can help you in such a situation. Bankruptcy Lawyers Tucson AZ can help you in reestablishing your credit score and get credit from lenders. Contact us now to see if we may help you!