Your credit score is an important number that can affect many areas of your life. The better your credit score, the easier it is to obtain all forms of credit, from a car loan, mortgage, or even a cell phone contract. Protecting and working to improve that number should be a goal for anyone. However, if you have filed for bankruptcy in New Hampshire, you may be certain your entire credit report is tainted forever. It is important to understand exactly how bankruptcy will affect your credit score and how you can actively work to protect or improve that number while you regain your financial footing. The Law Office of Joseph M. Annutto can help you understand the relationship between filing for bankruptcy and your credit score.

Credit Score Ratings

Credit scores are used by banks, utility companies, and landlords, just to name a few. The higher your score, the more ‘secure’ you appear on paper when an entity is considering lending you money, credit, or entrusting you to pay back a certain kind of debt. If your score is too low, you appear too risky and may not even be approved for certain types of loans or credit. The score is based on your past payment history, the length of that history, and details of any new credit. Debts that are outstanding are also part of how a score is determined.

How Will Bankruptcy Affect My Score?

Filing for bankruptcy will affect the score, regardless of your situation. But, the extent of how it affects the score varies greatly. If you have reasonably good credit at the time you file your credit score will take a large hit immediately after filing. If you have a low score and a high debt to asset ratio, your credit score will dip slightly as it may already be considered low. Bankruptcy and the affect it has on your credit can last up to 10 years.

There is an up-side to how bankruptcy will impact a credit score for nearly everyone. Once you file, bankruptcy leads to the discharging of some debt. This reduces overall debt load and gives the filer spare money to pay off other debts. The discharging of some debt also leads to a reduction in the debt to income ratio. If you begin paying back other debt on time after filing for bankruptcy, the score will improve quicker.

A Fresh Start

Bankruptcy is designed to be fresh start, not a punishment that prevents you from recovery and impedes the ability to move forward. Attorney Joseph M. Annutto can look at your unique situation and prepare you for how bankruptcy will impact your credit score and what to expect during and after the process takes place. Don’t let fear or misinformation stand in the way of filing for bankruptcy and protecting your credit score for the future.  Contact us today to schedule a free consultation. 603-881-9161.