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How Does Declaring Bankruptcy Affect My Credit Rating?

If you are forced to declare bankruptcy, your credit rating is going to be severely impacted. It is important to be aware of how bankruptcy is actually going to affect your life.

Once you declare bankruptcy, the information is placed in your credit file for seven years, which means that every time that you fill out a credit application, the lender or potential employer will be informed of the bankruptcy. It is then left up to them whether or not they want to extend you credit.

When you apply for credit, the lender will determine your rating and the bankruptcy will be considered. If the rating is considered to be too low, you may not be approved. Of course, there are lenders who specialize in loans for people with bad credit. They really do not care if the credit rating is too low. If you were late on payments or if you declared bankruptcy, they can still assist you. But they will charge a high rate of interest. 

Someone with a good credit rating will probably pay much lower interest, but having a history of bad credit, unfortunately, leaves you with little choice.

It is very important to begin to work on your credit rating as soon as possible. If you get a loan, make sure that you are always current on the account and make the payments early, if possible. Some department stores will issue credit cards even though you have bad credit, and you can certainly apply for secured credit cards. However if you do not feel that you are in a position to be able to repay any loans or make the payments on any credit cards, do not apply for them.

If you have late payments or if you default on another loan, your credit file will reflect the negative reports and repairing your credit rating will be twice as difficult.

Do not make a bad situation worse by applying for what you cannot afford to have. Try to work with what you already have by making it better. It is then that you can work on acquiring new credit to further increase your score. That way lenders can see that you are making an effort to repair your credit and they will be happy to help you on your journey.

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