Credit Score After Bankruptcy Drops Off

© 2009, Brandon Cornett. All rights reserved.

Reader Question: I have a bankruptcy that should drop off this month. It was discharged 7 years ago before the new ten year rule. I'm curious how it will affect my credit score after it drops off my record.

Your score should go up, but nobody can say how much. Only time will tell. A bankruptcy tends to have less of an impact on your credit score over time. So while it always hurts your score when it's on your credit report, the damage will usually lessen over time ... up until the bankruptcy drops off your credit report entirely.

I would wait a month or so after the seven-year mark to check your credit score again. An increase in your score as a result of the bankruptcy dropping off probably won't be instantaneous.

As for the ten-year rule for bankruptcies, some of them still come off after seven years. It varies based on the type of filing. Here's a quote from Maxine Sweet, one of the VPs at the Experian credit reporting company:

"Bankruptcy can be reported for up to 10 years from the filing date ... Experian reports Chapter 13 bankruptcy for seven years because it includes partial debt repayment. Chapter 7 bankruptcy remains for 10 years from the filing date because none of the debt is repaid."

Related Q&A sessions:

How to Repair Credit After Bankruptcy
This person wanted to know how to improve her credit a year after filing for bankruptcy, while it was still on her report. The response explains that the actions you take after filing will affect how quickly your score recovers, up to and after the bankruptcy drops off the credit report.

Hope that helps. Good luck in 2009.