670 Credit Score 6 Months After Bankruptcy!
One of the main issues when considering bankruptcy, is bankruptcy’s effect on your credit score. I have talked to thousands of people over the years and the most commonly held belief is that your credit will be absolutely ruined for 10 years if you file bankruptcy. This is a huge reason why the for-profit debt settlement/consolidation industry has exploded in the past 5 years. They focus on this one commonly held belief and use it to take advantage of countless people.
There is nothing that is further from the truth. However, just like many myths out there, this belief is based on a small kernel of truth. The 10 years comes from the fact that a Chapter 7 bankruptcy case will typically show on your credit report for 10 years. And naturally, everyone assumes that as a result, your credit score will also suffer for the entire 10 years.
A typical Chapter 7 bankruptcy case lasts about 4 months to complete from filing to discharge and dismissal. Once the case has been closed out, you can start rebuilding your credit. We recommend getting a secured credit card right after your case is closed. Then just practice good habits of using your new secured credit card and paying it off each month….and repeat for every month thereafter.
I recently talked to a client, whose Chapter 7 bankruptcy case was closed out about 6 months ago. I asked her about her credit score and she told me that it was at 670! That’s right, a 670 credit score 6 months after bankruptcy. Everyone’s situation is different and each person has different items on their credit report which may impact (positively or negatively) their post bankruptcy credit rating. But this example shows how quickly your credit can bounce back after bankruptcy.
Other clients in the past have reported similar results. Another client told me that his credit score was 720, 2 years after a Chapter 7 bankruptcy.
A bankruptcy case does not prevent you from earning a high credit score. It doesn’t even stop you from buying a house.
You can apply for a FHA or VA home loan 2 years after your case is over. And you can apply for a regular traditional mortgage 4 years after your case is over.
In nearly all cases, bankruptcy would have provided the quickest path to a great credit score and/or home ownership. Bankruptcy allows people to clear up their debt (lower expenses) and rebuild their credit.
Don’t let the 10 year myth get in the way of making the responsible decision to start fresh and rebuild your credit the clean and easy way with bankruptcy. Call us at (818) 305-6200 to talk to a Los Angeles bankruptcy lawyer today to discuss your options.