Many individuals who file for bankruptcy already have heavily damaged credit due to late payments, repossessions, foreclosure proceedings and judgments. In this case, one of the factors that has driven down that person’s credit is a very high debt-to-income ratio. A bankruptcy may actually help such a person raise his or her credit score by eliminating part of the debt that was throwing off the ratio.
The filing of a bankruptcy initially has a negative effect on your credit score; however, bankruptcy itself allows you to rebuild your credit score much faster than dealing with credit score damage caused by a foreclosure proceeding. At the end of the bankruptcy you eliminate your debt and obtain a fresh start, which allows you to rebuild your credit.
Although a bankruptcy will appear on someone’s credit score for up to 10 years, one’s credit score can be raised almost immediately after a bankruptcy discharge by implementing healthy credit and budgeting habits. There are several things that one can do to rebuild credit over time.
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