Bankruptcy Credit Score - Your Life After Bankruptcy

Are you afraid of how a bankruptcy credit score will affect your buying power? No doubt about it, bankruptcy may eliminate debt collectors, the fees and penalty rates assessed against default payments, threats of legal action, and legal actions. However, the consequences of filing bankruptcy are severe. And the smoke and mirrors that come with a bankruptcy credit score is nothing to sneeze at.

Now, I don't plan to make a mountain out of a molehill. But if you have filed for bankruptcy, you must consider what it will take to rebuild your credit. And on top of that, you must use your credit wisely, and at the same time provide a good explanation for the bankruptcy in your credit file.

To make a long story short, you need to understand how your credit life will work after bankruptcy. Pay close attention as I take a no holes barred approach to how filing bankruptcy can affect your credit.

Listen up...

In a nutshell, bankruptcies will be listed on your credit report in the public records section. This mark remains on a credit report for at least 10 years. Understand this...your bankruptcy credit score will be at least 100 point lower than it was before you filed.

What this means for you is lenders and creditors can increase your interest rates or even decline future credit because of the bankruptcy as a result of your low credit score. But, don't worry. There are other lenders who will extend credit you regardless of the fact that you've filed for bankruptcy. In short these lenders know that you cannot file bankruptcy again for eight years. So the likelihood of you paying them on time is great, and more importantly, they can charge you higher interest rates.

And here's something else I want to say...the better your credit score before filing bankruptcy, the more your credit score will drop due to the bankruptcy. But, on the other hand, if your credit was bad before filing for bankruptcy, the bankruptcy will not cause your credit score to drop that much.

A good rule of thumb is to prepare a statement that describes valid reasons for seeking bankruptcy protection. Surprisingly enough creditors and other business entities may be willing to do business with individuals who provide valid reasons for their bankruptcy. This statement is not a part of the 100 word written statement that consumers are allowed to add to their credit files. Instead, this is a verbal statement that you should consider making to creditor that will pull your credit report before completing business and credit transactions.

Without a doubt, your bankruptcy credit score will play a large role in lenders decisions to offer you credit. But, take the road less traveled and recognize what you are getting yourself into. After all...you don't want to apply for credit that will cause you to lose your shirt.