Here's how bankruptcy can hurt your credit score. Why Bankruptcy Is A Tough Thing To Handle Bankruptcy brings more than sleepless nights and bad dreams for the individual. It can also have a gloomy effect on their credit score. Whenever a person who just filed for bankruptcy applies for mortgages and loans, it puts a heavy frown on the faces of creditors and lending institutions. If you wish to shop for a loan, try to do it on a short period of time, because inquiries that are done within only a few days of each other, are usually counted as just one inquiry. You can also reduce the number of inquiries you make on your credit score, by going to lenders whom you've already done research on, or show an inclination for doing business with you. Shutting-off an old account only helps to make your credit report look young and fresh, but the damage has already been done before. Myth No. 4 Loan Shopping Hurts Your Credit Score Whenever a creditor makes an inquiry about your credit score, the score can drop by as much as five points. Some borrowers often fear that if they shop around for lenders, each time the lender makes an inquiry, their credit score plummets again. Once you've gotten approval, pay off the loan in the quickest time possible. Evaluate Your Credit Report For Errors Your credit report must still need to be fully evaluated, even if you've already been declared to be bankrupt. Check out any errors or inconsistencies on your credit report, because any negative item is only allowed to be reported for 7 years. Pay Your Obligations On Time Always make sure that you pay off all types of debt or bills on time. Late payments or any delinquencies will truly have a major effect on your credit score. If you forget to pay one or two of your bills on time, prepare to have some red marks or black eyes on your credit history. The classic case of over-utilization of credit cards happens when the individual runs out their balance, or goes over their credit limits, and only pays the minimum amount each month to avoid further financial problems. Always make it a habit to use your credit cards only when required, and always settle your balances as soon as possible.