Ask The Money Coach

Q: If I change my mind and decide not to file for bankruptcy, how should I make the 3 credit agencies aware of what I’ve done and will this weigh heavily on my credit score?

A: The current status of your bankruptcy should be reflected on your current credit reports from the credit agencies (including Equifax, Experian and TransUnion). It may take 30 days or so to be updated, but they should have received notice from the bankruptcy court about the change in status of your bankruptcy petition – i.e. that it was canceled or “dismissed”.

Read: How To Compare TransUnion, Experian and Equifax Credit Reports

Although a bankruptcy is a way of you legally discharging your debts, it is also perhaps the single-most negative mark you can have on your credit. Bankruptcies generally remain on your credit report for 10 years. After that time, they should drop off your credit file and have no impact on your credit score. Note that, according to Fair Isaac (the company that created the FICO credit score), a bankruptcy that is “Dismissed” does not lower your FICO score. This is because a “Dismissed” bankruptcy does basically wipe the slate clean, and is regarded from credit-scoring firms as if the bankruptcy never happened.

For those who have filed bankruptcy, check your credit reports from Equifax, Experian and TransUnion. (You can get each report free at AnnualCreditReport.com). On your credit reports, you will find your bankruptcy status under a reference to its “Disposition.” Check that the “Date Filed” for any bankruptcy is accurate. This matters greatly for your credit rating because the more recent a bankruptcy occurred, the more it will negatively impact your credit rating. Lastly, while other details about a bankruptcy – such as the court involved, the case number, or the type of bankruptcy filing (Chapter 7 or Chapter 13) – do not impact your credit score, you should nevertheless try to ensure that this data is also reported correctly.

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