Dear Creditnet: I filed Chapter 7 bankruptcy on April 1, 2009, and I've avoided any type of credit since then. I haven't even checked my credit scores in years. When will the bankruptcy fall off my credit reports, and will it happen automatically? If it doesn't happen automatically, what do I need to do to convince the credit bureaus to remove it? - Jake from WI
Answer: According to the FCRA (Fair Credit Reporting Act), most negative items can remain on your credit reports for seven years. A Chapter 7 bankruptcy, on the other hand, happens to be one of those negative marks that can stick around longer. In fact, a chapter 7 bankruptcy can remain on your credit reports for 10 years from the date of filing. Since you filed chapter 7 on April 1, 2009, you could still have more than 7 years to wait before the bankruptcy permanently disappears from your credit reports.
That's the bad news.
The good news is that it will have less and less of an effect on your overall credit scores as time passes, and when it does fall off, it should happen automatically. Avoiding credit altogether is understandable after you've gone through a bankruptcy, but it's also not the best way to rebuild your credit. It's important to remember that the FICO credit-scoring model places greater weight on recent activity in your credit profile, which means that you can further limit the effects of an old bankruptcy by building as much recent positive payment history as possible.
Consider getting yourself a secured credit card that will help you start building some positive payment history again. Use it sparingly (less than 10% of your available credit limit), and always pay your credit card bills on time and in full. Once your FICO scores climb out of the "bad credit" range, think about adding a credit card for fair credit to your wallet too so you can ditch the secured card, which will most likely have a higher annual fee associated with it. If you choose to stick with a secured card, that's fine too.
Just keep making your payments on time. The goal is to make sure you're consistently building positive payment history so that your recent credit profile is full of positive information when the old bankruptcy does fall off, which could even happen before the 10-year mark if you're lucky. Photo by Alan Cleaver
