Does a Discharged Bankruptcy Still Affect Credit Scores?

Dear ADZ,

A bankruptcy public record will have an impact on your credit scores as long as it appears on your credit report, even after it has been discharged.

In a Chapter 7 bankruptcy, also known as a liquidation bankruptcy, there is no repayment of debt. Because all your eligible debts are wiped out, Chapter 7 has the most serious effect on your credit, and will remain on your credit report for 10 years from the date it was filed. The accounts included in the bankruptcy remain on your report with their inclusion in your bankruptcy filing noted. Because derogatory accounts are deleted seven years from their original delinquency dates, accounts are usually removed before the Chapter 7 bankruptcy public record.

Updating Bankruptcy to Show Discharged

Once discharged, the bankruptcy filing listed on your credit report will be updated to show as such. Any accounts that were included in the bankruptcy will also be updated by your lenders to show they have been discharged and the balance owed is now zero.

Although you will no longer be responsible for paying those balances, the history of the accounts will remain, including any late payments made on the account.

How Can I Dispute Inaccurate Bankruptcy Information?

It's always a good idea to look over your credit report a month or two after the discharge to make sure that the bankruptcy and any accounts included in the bankruptcy have been updated and are being reflected accurately. You can get free copies of your credit reports from all three bureaus at AnnualCreditReport.com. You can also request your free credit report and FICO^® Score^☉ 8 directly through Experian.

If you notice that the bankruptcy listing itself has not been updated to show that it has been discharged, or if there is an account that should be showing discharged but has not been updated, you can dispute the information using Experian's online Dispute Center. Simply indicate which account you believe is appearing incorrectly and why. If you have documentation, such as the schedule of creditors that were included in your discharge, you can upload a copy of those documents as well.

You can also contact the lender directly to ensure that their records have been updated to reflect your bankruptcy discharge and to request that they update the account with each credit reporting company that they report to.

How Long Do Accounts Included in Bankruptcy Remain on Report?

If the accounts were delinquent prior to being included in bankruptcy, they will be removed seven years from the original delinquency date on the account.

If they were paid on time prior to the bankruptcy, then the accounts will remain on file for seven years from the filing date of your bankruptcy.

The good news is that as time goes by and you begin to reestablish your credit, the bankruptcy notations will begin to affect your credit less and less. Eventually, the bankruptcy and the accounts included in the bankruptcy will automatically be removed from your credit report.

Rebuilding Credit After Bankruptcy

You don't have to wait until your bankruptcy record is removed to begin rebuilding your credit history. The good news is that as time goes by and you begin to reestablish a positive payment history, the bankruptcy notations will begin to affect you less and less. Here are steps you can take to begin improving your credit:

• Make every payment on time. If you have accounts that were reaffirmed or not included in your bankruptcy, make sure all payments are made on time going forward. The single most important factor in credit scoring is your payment history.
• Open a new account. If all your previous accounts were discharged in bankruptcy, you'll need to establish new credit. If you are unable to qualify for a traditional account due to your bankruptcy, consider opening a secured credit card account or asking a family member to cosign.
• Become an authorized user. If you have a loved one with a strong credit history, they may be willing to add you to one of their accounts as an authorized user. An authorized user has permission to use the credit card, but the primary account holder is solely responsible for making payments. Not all lenders report authorized accounts to the credit reporting companies, so you'll want to check first.
• Sign up for Experian Boost^®ø. You can potentially increase your score by adding your on-time utility, cellphone and streaming service payments to your Experian credit report with Experian Boost. The enrollment process is fast, easy and secure. It includes a FICO^® Score 8 at the start of the process and provides you with an updated FICO^® Score 8 when you complete the process, so you can see how much your score improved.

Thanks for asking.
Jennifer White, Consumer Education Specialist