Although its hard to say what happens to your credit score after bankruptcy, based on a simulation ran by FICO, The score of the credit profiles ran in the simulation both dropped down to roughly the 520-540 point mark. This means that it will be very hard for you to obtain any kind of credit. Also, the bankruptcy will show up on your credit profile for every creditor to see, and will remain there for 7 to 10 years.
A lot of banks have policies in place that prevents you from getting a credit card or checking account, unless its been longer than a year since you filed for bankruptcy. So if you were thinking of getting a credit card from your bank, you will need to look elsewhere.
Oftentimes, a secured credit card is the answer for anyone that has filed for bankruptcy recently. I say its best if you do this as soon as possible after filing for bankruptcy, however you generally have to wait a few months in order to let your credit report cool down from the sudden shock of bankruptcy. By the 5 month mark, your credit report should have come down to a baseline and anything that should have been reported, should be on there by now.
How soon will my credit improve after bankruptcy?
Your credit will most likely not make any improvements until your bankruptcy has been discharged. This means that you might not be able to get an unsecured credit card until then. There is a small chance that your score will increase after filing for bankruptcy, but only if you have a lot of debt. The reason for the increase is because all the debt you owed, will get discharged, so your active debt ratio goes down significantly, thus increasing your credit score.
This is the best case scenario for some people. Others have experienced a drop to the 400 point mark and have not been able to get anything other than a secured credit card with a very low credit limit. At this point, the best thing you can do is find someone with good credit who is willing to add you as a secondary user to their account. This will make their credit payments and balance show on your credit report, thus increasing your score each month.
If you don’t have anyone that can add you to their credit card account, the next best step is to try to get a secured credit card with a low credit limit. Beware though, that depending on which bankruptcy chapter you filed, you might need to get permission from the court before you do so.
The reason why we recommend going ahead and getting a secured card is because this will help you get your credit re-established. The sooner you can get your credit showing positive history with no missed payments and an available credit card account with low usage, the better it will be for your credit score.
How long does it take to get a 700 score after bankruptcy?
It depends on which bankruptcy chapter you filed. On a Chapter 13 bankruptcy, your credit score should be around 700 approximately two months after the bankruptcy discharge. This is also dependent on whether you work on getting anything off your credit that shouldn’t be there. For example, if you have anything that is older than 7 years, you should work on getting those items removed from your credit report.
If you filed Chapter 7, you might be able to get there much quicker as your discharge won’t take as long as a chapter 13. Generally chapter 13 will take years before discharge, however a chapter 7 bankruptcy can usually be discharged a few months after filing.
This means that a few months after your discharge, you can start working on getting negative items rid from your report and apply for a secured credit card to get the juices flowing on your credit report and get that score going up.
The best course of action to take after the discharge of any of your debts is the following:
- Get a few secured or unsecured credit cards.
- Use them and pay them in full before due date.
- DO NOT use them between due date and statement date.
- Rinse and repeat this process until you have 3-5 cards.
- For each and every bad item that is on your credit report, offer the debt collection agency a Good Will letter or Pay In Full, even if it was included in the bankruptcy.
- Rinse and repeat until each of those items are gone, or your score is above 700.
If you take these steps, and do them many times over, you should have a credit score above 700 points, some people even report having a score in the 800 point range depending on how bad their score was before the bankruptcy was filed.
What’s the average credit score after bankruptcy?
Everyone’s position is a little bit different, so it’s hard to tell what the average credit score is, but based on an article from FICO, the average score is usually around 540 points.
It will be very hard for someone to get any credit right after filing, however there is a light at the end of the tunnel. If you are patient, and work on the items we talked about on this article, you should be able to have a credit score higher than what you had before your bankruptcy.
What happens after bankruptcy discharge?
This is usually everyone’s light at the end of the tunnel. So you’ve paid all your dues and don’t owe anyone anything. You will need to go into credit rebuilding mode, as there will be a lot of clean up to take care of. Best practice should be to try and get as much items off your credit report as possible. If you follow our steps to take after a discharge, you should see your credit score increase in no time.
We know that filing for bankruptcy is not something to be proud of, but sometimes it’s exactly what is needed in order to get yourself out of the debt system that plagues everyone around the world.