Bankruptcy is a legal solution for individuals who can no longer pay their debts. While it can be a way to start fresh financially, the impact on credit is substantial, causing the score to drop dramatically. Bankruptcy remains on a credit report for up to ten years, making it difficult to obtain new loans, rent homes, or even secure job opportunities in certain fields. During this period, it is crucial to demonstrate responsible financial behavior to try to minimize the impact.
After bankruptcy, credit repair focuses on ensuring that all items related to bankruptcy are reported accurately and on working to rebuild credit from scratch. This includes opening small lines of secured credit and paying them off in full, which helps demonstrate renewed financial responsibility. In addition, disputing report errors related to bankruptcy or any debt that has been paid off can also help improve the score over time.