Many Chapter 7 filers are surprised to find out that they can have a 600 credit score, or higher, within one or two years after their case is filed. If you have had financial setbacks and your credit rating is in the 500s or even the 400s, then a 600 score is a significant improvement. Here’s the even better news. You are by no means limited to a 600 FICO score; you can definitely increase your score higher and can gradually build up your credit rating to a 700 credit score after bankruptcy in as little as three to five years after you file even though you’ll have a Chapter 7 filing showing on your record.
600 Credit Score After Bankruptcy
There is a huge misconception out there that filing for bankruptcy always ruins your credit and prevents you from being able to increase your FICO credit score. This simply is not true. Sure, if you have flawless credit with a score of 800, then any adverse reports or mark on your credit history, even a slight blemish, will lower your score. But if you are like most people considering filing for bankruptcy relief, you probably don’t have an 800 score. If, as is more common with most San Diego bankruptcy filers, you are behind on your bills, revolving accounts, or other monthly obligations, then you probably have a score in the 500s, or even the 400s. If that is the case, then a Chapter 7 filing that is successful and results in a discharge can, and usually will, help you increase your credit score.
Think of it this way. Fast forward your financial life to 2 years from now. Which would look worse: (a) 2 years of continued 30, 60 and 90 day late reports on your credit report, or (b) all of your accounts eliminated with a followed by 2 years of perfect, on time payments? Clearly, a Chapter 7 filing, followed by two years of perfect, on time payments history, looks better and is better and shows that you are a more financially responsible person.
Think of it this way. Fast forward your financial life to 2 years from now. Which would look worse: (a) 2 years of continued 30, 60 and 90 day late reports on your credit report, or (b) all of your accounts eliminated with a Chapter 7 discharge, followed by 2 years of perfect, on time payments? Clearly, a Chapter 7 filing, followed by two years of perfect, on time payments history, looks better and is better because it indicates that you are more financially responsible.
If you have 2 years of missed payments and repeated late reports, you will look very irresponsible to a prospective lender from whom you are seeking to obtain credit. If you filed bankruptcy and thereafter maintain good credit history for a couple of years, then you will look like someone who had unexpected financial trouble and was responsible enough to meet your financial obligations head on by filing bankruptcy to get a fresh start.
If you are considering bankruptcy and want to know the effect it will have on your credit score, talk to a knowledgeable attorney. You may be surprise to learn that your FICO score will actually go up after you file and receive a discharge. With proper guidance from a San Diego bankruptcy lawyer, you credit score can improve to much higher than 600.