How to Remove Bankruptcy From Credit Report

If you’ve filed for bankruptcy in the past, you probably noticed it had a significant impact on your credit score. While it’s impossible to remove your bankruptcy from your credit report early, you will have the chance to remove it after a certain period.

In this article, we’ll discuss how bankruptcy affects your credit and what you need to do to eventually remove it from your credit report.

How long does bankruptcy stay on a credit report?

Bankruptcies will stay on your credit report for seven or 10 years, depending on the type. If you filed for Chapter 13 bankruptcy, you’re reorganizing your debts and working with creditors to establish a payment plan. This type of bankruptcy will fall off your credit report after seven years.

If you filed for Chapter 7 bankruptcy, on the other hand, you agreed to give up some of your assets, which will be used to repay creditors, in order to keep other ones, such as your home. Chapter 7 bankruptcies stay on your credit report for 10 years.

Accounts and other assets included in bankruptcy

If you’re filing for bankruptcy, you’ll be required to disclose several different types of accounts—and other assets—to the courts, including the following:

• Financial accounts (checking and savings accounts, investments).
• Primary and secondary homes, plus any land ownership.
• Property related to farming or fishing.
• Vehicles.
• Personal and household items.
• Business-related property.

It’s important to report all assets in a bankruptcy filing. It could be considered bankruptcy fraud if you don’t, whether unintentional or not.

Can you remove bankruptcy from your credit report?

Typically, bankruptcies can only be removed from your credit report if they’re old enough to be removed or have been inaccurately reported to a credit bureau. While you might think errors on your credit report are unlikely, a recent Consumer Reports investigation found that 34% of people had at least one error on their credit report.

If you discover an error, you’ll need to contact the credit bureaus reporting it and file a dispute to have it removed. Typically, this can be done online, over the phone, or through the mail. The credit bureaus will have approximately 30 days to respond to your dispute.

The process is straightforward. The credit bureaus will reach out to the source of the disputed information. If they can’t verify the information is accurate, the bankruptcy will be removed from your credit report. In some cases, they might need additional information to verify.

What to avoid when trying to repair your credit

Your credit score will take a hit if you've gone through bankruptcy. Someone with good credit (700+ FICO Score) could see their credit score drop by as much as 200 points. If you have a lower credit score (below 680), your score could drop by 130 to 150 points.

That means you’ll have some work to do if you want to rebuild your credit score back to where it was before. Here are a few things you should avoid when rebuilding your credit.

Missed payments

Beyond bankruptcy, the worst thing you can do for your credit score is miss a payment. Your payment history makes up 35% of your credit score. To help avoid missed payments, you can set up automatic payments for your different monthly bills.

Most credit card companies will allow you to set up automatic payments to pay the minimum payment, statement balance, or entire balance. You can also set up automatic payments on other bills. If the feature isn’t available, create a calendar reminder for a couple of days before the due date so you know you have a payment due.

Not monitoring your credit report

Monitoring your credit report is an essential part of rebuilding your credit. You need to keep yourself updated on your progress and be aware of any potential errors that could hurt your credit further.

Various companies offer credit monitoring services. In exchange for a fee, or sometimes for free, they’ll keep you updated on everything related to your credit. There are plenty of options to choose from, including FICO’s myFICO.

If you find an error that is due to identity theft, first contact the FTC’s website IdentityTheft.gov. You’ll get checklists, sample letters, and other tools to guide you through the job of reporting the theft and recovering from it.

Don’t spend more than you can afford

After going through bankruptcy, learning from your mistakes is important. Start by setting up a budget. This is going to help support you living within your means. The first step is to list out all your fixed monthly expenses. Writing them down will give you a better idea of how much disposable income you have for things like food, entertainment, etc.

Once you’ve set up your budget, stick to it each month. This will help you avoid ending up in the same place you were before.

Don’t avoid credit

If you’ve had a problem with debt, it’s easy to be scared off by credit. This shouldn’t be the case. Credit cards can play a big role in rebuilding your credit.

One option is to become an authorized user on someone else's account. Using a responsible person’s card can be a great way to rebuild confidence and boost your credit score.

Another option is to use a secured credit card. You’ll put down a security deposit that will act as your credit limit. From there, you use your card like normal, and each monthly payment you make on your account will be reported to credit bureaus, helping to improve your credit score.

TIME Stamp: There is a way back from bankruptcy

Filing for bankruptcy can have a significant impact on your credit score. Unless it was added due to identity theft, it will stay on your credit report for up to 10 years. However, there are steps you can take to start rebuilding your credit.

Frequently asked questions (FAQs)

Can I get an 800 credit score after bankruptcy?

While achieving an 800 credit score following bankruptcy is possible, it will take time and hard work. Above all, it is important to pay your bills on time each month and keep your credit card balances low.

How to remove Chapter 7 bankruptcy from a credit report early?

The only way to remove a Chapter 7 bankruptcy from your credit report early is if it was added inaccurately. Otherwise, it will drop off your credit report after 10 years.

How do you get a 700 credit score after bankruptcy?

Improving your credit score to 700 or higher after bankruptcy is possible but will take a few years. It will require good credit habits, including paying your bills on time and keeping your credit utilization to a minimum.