Filing For Bankruptcy Can Improve Your Credit Score
Here is a little known fact. In some cases, filing for and being discharged from bankruptcy, can actually improve your credit score. Most debtors are not aware of their credit score when they commence bankruptcy proceedings. If they did, they would probably be surprised at the before-and-after results. Consider the factors affecting your credit score.
Credit scores are calculated using factors such as credit applications, credit approvals, credit history including amounts overdue and how long overdue, and completed loans (and their histories). If a debtor has a number of debts that are all several months overdue, then their credit score is going to be very low.
Once an individual has had all their debts discharged, their credit history is modified. It no longer shows amounts overdue or the overdue length in time; all it shows is a debt discharged through bankruptcy. Furthermore, you are essentially debt free. Put those two conditions together and your credit score may well be higher than before petitioning for bankruptcy.
Don’t take this as an easy way to clear debts and start all over. Your bankruptcy history will stay on your record for as long as ten years and while your credit score may be boosted a little, it will still be too low to qualify for worthwhile credit in the short term. You will need to work hard once more to rebuild your credit score. What bankruptcy does do is wipe your debts and give you a higher credit score base from which to build on.
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