Filing for bankruptcy can be a double-edged sword. It is good because it allows you to regain control over your finances and get back on track. If you have large amounts of debt, it can remove that from your credit report, which can be beneficial to your credit score.
On the other hand, Experian explains a bankruptcy on your credit report will also be a huge negative on your credit score. It tells lenders you have had financial issues in the past and had to resolve them through this type of legal process. All is not lost, though.
While seeing a bankruptcy on your credit report can give a lender pause, it may not be that big of a deal. Most lenders will concern themselves more with your payment history.
Right after your discharge, you may only have bankruptcy on your credit report, which will lower your credit score. However, you can begin building your credit, which will develop a payment history. As time goes by, bankruptcy will seem less like a negative to lenders.
A bankruptcy will remain on your credit for 10 years if you filed Chapter 7. If you filed Chapter 13, then it will be on there for seven years. As mentioned, though, once you begin to rebuild credit, the existence of bankruptcy will become less important to lenders who are considering extending you an account.
You may run into a creditor that will only look at the bankruptcy and use that as an immediate reason to deny you credit. It happens, but most creditors will take the time to consider all the aspects of your credit report. If you show you are rebuilding, then you can greatly increase your creditworthiness.