Maybe you have filed for personal bankruptcy before. Maybe you are contemplating that legal option right now. Even those who need to and should file for Chapter 7 or Chapter 13 bankruptcy tend to hesitate. They worry that doing so will look bad, or they worry that they will never repair their credit scores.

Various myths exist regarding the impact on credit scores. The idea that there is no hope for your credit rating after bankruptcy is one of those myths. Here are a couple more commonly held misconceptions about credit scores:

You should let your credit cards just gather dust

If you are racking up thousands and thousands every month on your credit cards and regularly not paying them off, then, yes, the use of credit cards could be bad for you. There is a savvy way to rely on credit cards, however. USA Today notes that FICO looks at what is called your “credit utilization ratio.” The theory is that you don’t want to go beyond having an outstanding balance of more than 30% on your credit cards. Moderate use and consistent payment of your bills can help build a strong credit score.

The fewer credit cards the better

It is understandable to want to simplify your financial life, especially if you have gone through bankruptcy and are trying to stay on top of your bills. It might be tempting to cancel your credit cards or perhaps your oldest card in an effort to simplify matters. Canceling a credit card can negatively impact your credit score. The rating system looks at the length of credit life on your cards. If possible, try to keep the line of credit open, but just don’t use the card, or use it minimally and pay it off regularly with automatic payments. 


We know that money matters and the issues of bankruptcy and credit scores are complicated. We know this because we help Louisville people every day try to fight for their financial freedom and weigh the pros and cons of their debt relief options. If you need trusted advice about your financial hardships, reach out to a bankruptcy attorney who can help.