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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. The impact of filing for bankruptcy can be traumatic. 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. If you already filed for bankruptcy, it is crucial to think about how you will rebuild your credit score. 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.

Basically, it is important to understand how your credit will be post bankruptcy. Pay close attention as I take a no holes barred approach to how filing bankruptcy can affect your credit.

If you went through a bankruptcy, it will be listed on your credit report. 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, you shouldn't stress too much about it. There are other lenders who will extend credit you regardless of the fact that you've filed for bankruptcy. In brief, the lenders are aware that you'll be unable to file for bankruptcy again for 8 years in the case of chapter 7 and 4 years in the case of chapter 13. So there is a strong chance that you'll pay on time, and they can also charge you a higher rate of interest.

And here's something else I want to say…the higher your credit rating before the bankruptcy, the more dramatic the drop of your credit rating will be after 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. It is interesting to note that certain businesses and creditors might be willing to do business with people who have valid reasons for there bankruptcy. So all hope is certainly not lost. 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 spoken statement you would be advised to think about saying to the creditor who is going to pull your credit report prior to the completion of credit and business 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,Avoid applying for credit when everything you have will be at stake.

Tags: bankruptcy credit score