What Happens to My Credit Score When I File For Bankruptcy?
There are a number of fictions about credit scores. Fiction #1: You will not be able to get a job because your credit report shows that you filed for bankruptcy. FACT: Potential employers do not pull your credit score, although they sometimes pull your credit report. It is somewhat more likely to happen if you are in finance or security. That being said, most employers do not pull your credit report as part of the hiring process. And a potential employer cannot pull your credit report as part of the hiring process without your advance knowledge and without your permission.
Fiction #2: Every time you check your credit report it hurts your score. FACT: There are different types of credit inquiries. When your credit score is pulled by a financial institution for purposes of extending you credit it can reduce your credit score in certain circumstances. But it never hurts your score when you pull your credit report.
You can pull your credit report from each of the three major credit reporting agencies (Equifax, TransUnion, and Experian) once per year for free. The credit score is not free, it is the report which is free. It is a good idea to stagger your pulling of the reports so that you are getting a free report about once every four months. If you see something on your credit report which is not accurate, there is a way to dispute an inaccurate entry.
Fiction #3: If you file for bankruptcy your credit score will never improve. FACT: When you file for bankruptcy, it will appear on your credit reports for seven to ten years, depending on the credit reporting agency. But as long as you do not fall behind on any payments moving forward, your credit score will improve over time.
It will take about eighteen months after the filing of the bankruptcy for your score to improve enough for you to notice the difference. It could take up to four years after the filing of the bankruptcy for you to qualify for a mortgage. I have helped thousands of people through this process over the last eleven years, and I want you to know that people do qualify for mortgages post-bankruptcy. People get jobs, they rent apartments, and they purchase automobiles.
Roughly 800,000 people per year file for bankruptcy. You walked past someone today who filed for bankruptcy, but you could not tell by looking at them. In your car today you shared a stop light with another motorist in the intersection who filed for bankruptcy, but you did not know who it was. In the neighborhood where you live, you have a neighbor who has filed for bankruptcy. Life does not end with bankruptcy, and neither does your credit score. Bankruptcy is not the problem, it is the solution to a problem so that you can move forward in your life again.
The above information is a general overview and is not intended to be used as legal advice. If you are considering filing for bankruptcy, the best thing to do is call our office at 248-557-3645 and schedule a free consultation so you can receive advice which is tailored to your specific circumstances.
By: Michael Benkstein, Esq.
Managing Attorney, Bankruptcy Department
The Law Offices of Joumana Kayrouz, PLLC