How Filing Bankruptcy Affects Your Credit Score in Pennsylvania


credit score

One major concern of our clients is what will happen to their credit score if they file for bankruptcy. 

While you probably have a general idea of what your credit score means, some things that affect your credit score may surprise you!

The main factors used to determine your credit score are your payment history, the amount of debt, the age of your accounts, the types of accounts you have, and the recent credit inquiries you’ve had on your credit report. Credit scores are negatively impacted when a person misses a payment, or their debt is too high. This is called credit utilization. Generally, you do not want to use more than 30% of an available balance on a line of credit. Unfortunately, you can decrease your score much quicker than you can increase it. 

When faced with trying to make a debt relief decision, many times our clients have already suffered the negative effects of missed payments or too much debt on their credit report. Filing bankruptcy will allow a fresh start and for them to begin rebuilding their credit. 

Continuing with bad credit can affect every aspect of your life. If you have bad credit, you will pay more for a vehicle, a house, insurance, or a credit card. If you are planning on having a large expense soon, it may benefit you to remove the overdue bills and accounts from your credit report. 

Bankruptcy can allow you to begin to rebuild your credit within four months from now. After bankruptcy, there are many options for improving your credit – such as secured loans, secured credit cards and becoming an authorized user on someone else’s account. You’ll be able to get credit again. 

One extra tip to remember: if you are considering debt settlement or debt negotiation, these programs require you to be delinquent on your accounts and remain delinquent for years prior to the completion of your program. Therefore, you will not be able to rebuild your credit for at least the length of that program. 

Bankruptcy allows you to rebuild your credit four months from now. 

At Bononi & Company, we can help you start this process. Give us a call or visit our office.