How Much Does Bankruptcy Affect Credit Score in Arizona?

Credit scores are essential to success as an adult in modern day capitalism. Those who lack credit history have an arguably punitive credit score that limits what sociologists refer to as “life chances.” Credit scores are highly complex numerical figures calculated after factoring in all sorts of variables ranging from balances carried to years of credit history, on-time payments and beyond.

Arizonans considering declaring bankruptcy are understandably concerned that going bankrupt will affect their credit score. Let’s clear up the confusion to demystify the impact of declaring bankruptcy on one’s credit score.

Bankruptcy’s Impact on Credit Score

In short, bankruptcy significantly changes credit scores. However, the extent of this impact hinges on your unique situation as well as other factors. The takeaway is that the impact of declaring bankruptcy in Arizona will impact each individual’s credit score in a unique way. The bottom line is you will be tasked with rebuilding your credit after declaring bankruptcy.

Quantifying the Impact of Bankruptcy in the Context of Personal Credit

Let’s shift our attention to attempting to determine exactly how much declaring bankruptcy will change one’s credit score. If you successfully declare bankruptcy in Arizona, the bankruptcy will fall under the umbrella of the “payment history” component of the credit score calculation.

Specifying the exact numerical impact on credit score differs from one person to the next. The lower an individual’s credit score is prior to declaring bankruptcy, the less that score will drop. The higher the individual’s credit score is prior to declaring bankruptcy, the more the score will drop. It must be noted the vast majority of those who file for bankruptcy have a low credit score to start with so going bankrupt has the potential to make only a small impact on this metric of financial trustworthiness.

Rebuilding a Credit Score After Filing for Bankruptcy

The silver lining to declaring bankruptcy is that the reduction in the filer’s credit score will only be temporary. This score will move back up across posterity assuming the filer does not go bankrupt once again and proactively takes the step necessary to rebuild creditworthiness. In particular, it will help to obtain secured credit cards to rebuild credit after an Arizona bankruptcy.

Everyone considering going bankrupt should be aware that it is the age of the negative information on one’s credit report that determines the impact on the credit score. This means those who are patient and wait years after going bankrupt to attempt to take out a mortgage, auto loan or another sizable line of credit will have a good chance at securing that financial support. The little-known truth is that bankruptcies drop off credit reports in seven to 10 years, meaning there is minimal impact on the individual’s credit score by that point in time.

You are Still Creditworthy Even After Going Bankrupt

Declare bankruptcy, reset your financial report card, wait upwards of a decade and your financial status will be back to normal before you defaulted on one or several lines of credit. Even if you declare bankruptcy in Arizona, you can still obtain a line of credit prior to the 7-10 year wait. In particular, creditors are willing to help those who declare bankruptcy rebuild their credit through secured credit cards and those with a comparably high interest rate.

Move forward with such lines of credit, pay off your balances on time and in full without exception and you will have done your part to reestablish a good credit score through a positive payment history. Keep in mind, the interest rate on your credit card becomes irrelevant if you pay the balance in its entirety every single month without exception.

The takeaway from this content is there is reason for hope even if you plan to declare bankruptcy in Arizona. Meet with a bankruptcy attorney to discuss your options, focus on the positive and you will eventually rebuild your finances.