Bankruptcy and Your Credit Score
Many people work hard to maintain a high credit score. According to one study, the average American credit score is 695, with Florida residents having an average score of 669. Nevertheless, many people with high scores are struggling to keep up with their bills. For them, bankruptcy might be the best option for erasing unsecured debt and gaining some financial breathing room.
If you are worried about shredding your credit score, your fears might be exaggerated. To be sure your credit score will fall—though the amount will depend on your current score. Nevertheless, it is a misconception that your score will forever be tanked. Instead, many of our clients have rebuilt their credit back up in a respectable amount of time.
Check Your Current Score
The simple fact is: the higher your current score, the more it will fall after you declare bankruptcy. Get some idea of your current credit score by looking in the following places:
- Your credit card company might tell you the score. Look at any recent statement or check your online account.
- A credit counselor might be able to get your score for free. If you have an appointment with one, ask for your score.
- Purchase your score from myfico. It will cost around $20.
- Many websites offer a credit score. Check Credit Karma, Credit Sesame, or another website. These websites do not have your FICO score, but the score they have is good enough for your purposes.
On average, a score in the 700s can fall 200 or more points after bankruptcy, landing you in the low 500s. A score already in the 500s will probably fall less, though it should still go down. Everyone’s situation is different, however, so it is impossible to predict with certainty how much your score will fall.
Time Your Bankruptcy Just Right
If your score is currently in the 500s, or even lower, then it might not really matter when you apply for bankruptcy. You are unlikely to qualify for any loans with your current score, so there is no reason to delay.
However, if you have a very high score, then you might want to delay the bankruptcy. For example, you might be preparing to move to a new apartment or apply for a new job. You should expect a landlord or employer to pull your credit history, and you might suffer negative repercussions if your credit score is too low. In these situations, you might delay bankruptcy a couple of months, if possible, until you are settled into your new life.
Remember not to delay bankruptcy just to take out loans, especially if you know you cannot repay them. That is bankruptcy fraud, and the lender can challenge your attempt to discharge the debt in bankruptcy.
Discuss Your Options with a Plantation Bankruptcy Attorney
Financial disaster can strike at any time. Before rushing into a bankruptcy, analyze your options by meeting with a bankruptcy attorney at Nowack & Olson. We also have offices in Miami, Jupiter, and Boca Raton, so we are never far away. To schedule your free consultation, please call 888-813-4737 or submit our contact form.