How Much Your Credit Score Will Be Affect When You File Bankruptcy Depends On What It Is Before You File
One of the biggest fears my clients have is that bankruptcy will ruin their credit, and that they’ll never be able to get credit again. This fear has to be in the top three misconceptions that people have about bankruptcy. While filing bankruptcy will definitely affect your short-term ability to get credit at good interest rates, your interest rates will improve with time.
How much your credit score will be affected by bankruptcy is primarily related to what your credit score at the time you file. According to Fair Issac, the company who issues the FICO credit score that most people are familiar with, the higher your credit score at the time of filing, the more it will drop after you file. So, someone with a credit score of 780 might expect to see a 200 or more point drop, while someone with a 650 credit score may lose 150 points.
The good news is that you can start rebuilding your credit score within a fairly short time after you file. One common strategy is to apply for a secured credit card and using it for small purchases, which you pay off monthly. It’s not unusual to gain 100 points in your credit score within a year of filing.
How bankruptcy will affect your credit score is just one thing to consider if you’re thinking about bankruptcy. If you have concerns about how bankruptcy will affect your future, we hope you’ll come in for a free, no-obligation consultation with an experienced lawyer. You can schedule an appointment by calling 303.331.3403 or by using our online scheduling system.
