The O'Fallon Law Firm L.L.C.

Credit Score Ramifications

We are often asked, “How does a Chapter 7 Bankruptcy impact my credit score?” In our experience, you will be able to begin rebuilding your credit immediately upon receiving your Chapter 7 Bankruptcy discharge and being relieved of those old obligations.

If you are considering a Chapter 7 Bankruptcy, chances are good that your credit score is suppressed and you are carrying significant debt. In that situation, you are not likely to be an attractive customer to any bank or lending institution. If you continue in your current situation indefinitely, your credit score will remain low and your debt load will likely remain high.

Filing a Chapter 7 Bankruptcy will have an immediate impact on your credit score. However, upon receiving your Chapter 7 Bankruptcy Discharge, most if not all of your unsecured debt is eliminated. After that debt is eliminated, you can immediately begin repairing your credit score through the intelligent use of credit cards and other forms of credit. You build a credit score by using credit, and we advise you to accept at least one of the credit card offers you will assuredly received upon filing your Chapter 7 Bankruptcy. Using that card intelligently, by staying within the credit limits and paying it off each month, will improve your credit score significantly. Your credit score will likely be higher in two years if you file Chapter 7 Bankruptcy than if you continue to struggle through your current situation.

Continuing to make the monthly payments on secured debts, such as a mortgage or car loan, will also positively impact your credit score as those payments are reported to the credit reporting agencies. Many of our Chapter 7 Bankruptcy clients have obtained car loans almost immediately upon receiving a Chapter 7 Bankruptcy. Many of them have also received home loans within a year or two of filing.

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