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How soon after bankruptcy may I begin repairing my credit?

Common myths regarding bankruptcy include the inability to apply for new loans or credit cards. Although bankruptcy stays on your credit report for up to 10 years, you may begin repairing your credit as soon as you feel ready.

As noted by, building a history of making payments on time could help re-establish credit. If you hold an existing mortgage, for example, sending in your payments by the due date, even during bankruptcy, may show lenders you have a creditworthy future.

How could a car loan help improve my credit?

In addition to making on-time payments on a mortgage, you could rebuild your credit through a car loan. Chapter 7 bankruptcy allows some filers to keep their financed vehicles. If your car’s market value falls within the state exception limit, you may keep it.

The court may decide not to discharge auto loan debt in a Chapter 7 bankruptcy. This means you could rebuild a record of on-time payments through your existing car loan. If you qualify for a Chapter 13 bankruptcy, you may apply for a car loan when necessary, but only with the trustee’s permission.

When may I apply for a new credit card?

As reported by The Ascent, it takes an average of three to six months after a Chapter 7 bankruptcy to apply for new credit cards. For Chapter 13 filers, it could take three to five years. Creditors typically charge higher interest rates because of a lower credit score or bankruptcy. A borrower’s payment record, however, accounts for 35% of a FICO score. If you consistently meet your payment deadlines, you could see an improvement in your score.

A bankruptcy does not mean you may no longer apply for loans or credit cards. It might take time to repair your credit, but you could do it sooner by taking control of your finances.


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