In just thirteen months, Maria’s credit score after bankruptcy was above the national average
Are you one of the people who still thinks bankruptcy hurts your credit score?
Maria M was worried about her credit score when she came to talk to me in November 2013. That’s part of the reason she put off filing bankruptcy until spring 2014. But a second mortgage on a foreclosed home was suing her for over $50,000. She knew she had no choice.
Fast forward to August 2015. Maria brings in a family member who has also been putting off filing bankruptcy. And Maria tells me her credit score is back up to 640. She was so happy that her credit score after bankruptcy was moving up so fast.
Now 640 is not a great score. But it can be good enough. Although 640 above the 630 national average of scores, it just gets you out of the bottom third of people. (Some people have really, really bad scores.)
I urge people, if as all possible, to wait three years after bankruptcy to finance a car. (In three years, your credit score after bankruptcy can be well above 700.) But for people who have been dragging bad credit around for years, people who’ve been paying upwards of 20%, a car loan at 11% or 12% would look mighty good.
Let me put it another way. One third of the country have credit scores below 640. Charge offs, collections, repossessions! Nearly everybody in that group would see their scores improve if they filed bankruptcy–but most of them wait until they get court papers, or even until they get garnished.
Bankruptcy is in the law to help you–and to help the country. The country is better off if you can fix your credit. The country is better off if you can get a car loan at a payment you can afford. The country is better off if you can save up and buy a house.
What does a low credit score mean? A low credit score means the lenders know you need to file bankruptcy. And that you are going to, sooner or later. The only person who doesn’t know it, is you.
Your credit score after bankruptcy is your road to a better life.