One of the biggest benefits of bankruptcy that people tend to frequently overlook (or are unaware of) is the positive impact that it can have on your credit score. While this may seem counterintuitive, the fact is that bankruptcy can (and in many cases does) have a very positive impact on your credit score. In some cases, you may experience a dramatic increase in your credit score.
What happens to your credit score after bankruptcy depends a lot on where your credit score was to begin with, before you filed. If you had a very high credit score (for example, an 800 score), then you can expect to experience a drop in your credit score. It will take a while to get back up to an 800 score. But if you have experienced any financial troubles or misfortunes and have a relatively low score (for example, in the 500s), then bankruptcy can increase your FICO credit score. This assumes that you practice good credit habits after you file your case and obtain your discharge.
How long does it take to have a 600 credit score? If you practice good credit habits, you can usually expect to have a 600 credit score after bankruptcy within about one to two years after your case is filed and you receive a discharge.
How long does it take to have a 700 credit score after you file? After reaching 600, one to two years after bankruptcy, if you continue to practice good credit habits, your credit score will continue to gradually improve. By continuing to pay all of your bills on time, and properly establishing new credit, you can often attain a 700 credit score after bankruptcy within about 4-5 years after your case is filed and you receive a discharge.
Can a lawyer guarantee you a particular score after filing bankruptcy in San Diego? No. Nobody can “guarantee” you a particular score. FICO is constantly changing their formulas and standards. No one, not even a FICO lawyer, has a crystal ball or knows how the FICO algorithm may change or evolve in the future.
The most you can do is base your decision on concrete facts at your disposal. The reality is that most of our clients have a score in the low 600s, or even higher, within one to two years after they file bankruptcy and obtain a discharge. Some of our clients end up with a 700 score within 2-3 years after their case is filed and they receive a discharge.
So while nobody knows for sure what the future has in store, it’s a pretty good bet that you’ll have a similar experience to many of our clients and enjoy at least a 600 score soon after your case is filed and you receive a discharge. And if your score is currently in the 500s, then a bump up to 600 is, without question, a significant improvement from your current position.
One of the things that an experienced San Diego bankruptcy lawyer will be able to show you is how to practice good credit habits so that you can rebuild your credit and increase your FICO score as rapidly as possible. There are a few simple tips you can follow to help improve your position, such as paying your bills on time, reaffirming car loans by executing a reaffirmation agreement, and opening new revolving accounts and paying them on time. You should discuss these tips with your lawyer and proceed with guidance from your lawyer to give you the best results.