It's time to get back in the game and make the steps needed to get to that 800 Credit Score After BK.
Bouncing back from Bankruptcy may sound impossible, but with some patience and proper process, you can make it happen.
With a Chapter 7 BK, you get to start over on a clean slate even though you may probably have some credit issues in the past.
What will my credit score be after bankruptcy?
Although your FICO credit score may take a hit, the exact amount can vary. It all depends on where you started your process.
But according to the FICO scoring model, filing for bankruptcy will drop a credit score of 700+ by about 200 points (give or take).
A Lower score, around 600 can take a hit of about 130 points. So, based on your current score you can make an estimation of what your credit score will be after bankruptcy.
But this post is about moving forward and building after the facts.
Make Moves To That 800 Credit Score After BK
Lenders want to see where you are financially, that you have enough income and a bit leftover. Also, they won’t have to worry that you’ll file for bankruptcy to get rid of any new debt.
- Assess Your Situation (You’ve probably already done this )
- Check Your Credit Score
- Fix What You Can Now
- Create A Budget
Assess your situation by grabbing a free annual credit report. Familiarize yourself with your credit report, if you see errors, inaccurate information or any inconsistencies you can dispute them. Always take action on these errors. You can write the dispute letters yourself or get a credit repair company like Ovation Credit Services to help you get to a 800 credit score after bk.
Continue to Check Your Credit score. It’s smart to keep track of your score using some free credit monitoring tools.
Fix What You Can Now: If you use a credit repair company like Ovation or Creditrepair.com, they have credit tracking and alerts in their packages. Once you pick a score to watch, stick to it because you will get frustrated watching each score go up and down.
Creating this budget will help you stay on top of your finances. As mentioned, you may have done these things and your pre-discharge counseling should have given you tactics on budgeting.
Make sure to stick with those principles, continue doing research and taking action.
Start The Rebuilding Process
At this point, your pre-bankruptcy financial history raises red flags to lenders. All they see is risk, risk, risk, which will make it hard to get an 800 credit score after BK without making these essential moves.
We want to change their minds by taking a few key steps and providing extra assurance that they won’t lose money.
You can use these three financial vehicles to begin your credit restoration process:
- Secured Loan: You can get this a credit union or a community bank. One involves borrowing against the money you already deposited, so you won’t be able to touch that money until you pay-off that loan- assurance. And the other, you can apply for without putting your cash up.
- Secured Credit Card: This is backed by a deposit and the credit limit is the amount you have on deposit. You can use a secured credit line to build your credit until you are eligible for an unsecured card.
- Authorized User Status: Instead of asking someone to be a cosigner, you can ask them to become an authorized user on one or serval of their credit lines. Make sure the card will report payment activities by authorized users or it won’t help you. You don’t have to use their credit or have access to it. They simply need to add you as a user and that credit line counts to your overall credit and credit utilization
5 Myths That May Stop You From Getting To The 800 Club
1st Myth: Bankruptcy will ruin your credit forever and ever.
The truth is you can see a 800 credit score after bk. Bankruptcy will hurt your credit in the short term. In general cases, a BK7 can be on your report for about 10 years.
But this does not mean you can’t rebuild credit, fix current inaccuracies and continue to practice good financial habits.
If the BK itself cant be removed, you still can take actions elsewhere to counteract the negative effect it’s having on your credit report.
And, if you get ahead of it, you can speak to an attorney about what a bankruptcy will do to your credit so as to minimize any damage.
Related: Nolo helps consumers and small businesses find answers to everyday legal questions. Visit Nolo.com today for your legal needs
2nd Myth: ALL Bankruptcy info will stay on your credit report for ten years
Actually, only the public record of a BK7 lasts for ten years. Other bankruptcy references stay on your report for seven years, like:
- Trade lines that state “account included on bankruptcy”
- Third-party collection debts, judgments and tax liens discharged through BK
- Chapter 13 public record items
3rd Myth: You will have poor credit as long as the bankruptcy information stays on your CR
Actually, you can expect a lower score after your bankruptcy. But you can rebuild your credit with proper management and smart tactics.
You can make moves to 800 credit score after bankruptcy. It may take 2-4 years depending on your situation, still, it can be done.
- Add new credit
- On-time payments on all credit lines
- Keep credit Util under 30 percent
4th Myth: You won’t be able to get a credit card or loan after bankruptcy
Actually, credit cards will still be issued to you. There are credit cards specifically made for people with a checkered credit history.
Then there are credit builder loans that are secured with a deposit as collateral and will help you along your credit building journey.
5th Myth: BK affects the credit of all consumers equally, regardless of the amount of debt or number of debts included.
Well, your credit score will factor in details such as the amount of debt discharged and the proportion of negative to positive accounts on your report.
Someone with relatively low debt and only a few accounts included in the bankruptcy, your credit score will be higher than someone with a more severe bankruptcy
FYI: What’s The Average Credit Score After Chapter 7?
Well, the average credit score after chapter 7 depends on where you begin.
People with a high credit score of 750+ have more to lose, so their credit score can drop about 200 or so points.
Other with a fair or bad credit score around 600 can see a drop of about 150 points
Good Luck Moving Forward
Be vigilant about paying on time, keep your credit utilization (credit-to-debt-ratio) low.
We at CreditReps suggest you get your utilization down to 10% (8% if you really want to get aggressive with your process).
It’s imperative that you keep up with your payments, especially after coming off of a BK. So, having a long period of time without late payments will get you up from under that rock.
The objective of all these steps and suggestions is to get you out of the red flag zone. You want to no longer be deemed as credit risk, but you won’t be able to do without taking action (and bumping your head a few times.)
Follow your plan and you will see a 800 Credit Score After BK.