Many of our Escondido readers have probably seen the now-commonplace commercials on television about services used to monitor a "credit score." As readers may know, a credit score is a distillation of a person's creditworthiness -- the person's reliability when it comes to that person's ability to repay a loan. And, as has been noted in previous posts here, there are numerous things that can either raise or lower a person's credit score.
For Escondido residents considering a personal bankruptcy filing, one of the many concerns may be "What's the negative impact of bankruptcy on a credit score?" Anyone who is familiar with bankruptcy -- Chapter 7 bankruptcy in particular -- knows that there is a kind of trade-off when it comes to filing for bankruptcy: yes, debt will be discharged, but the filer will likely have quite a bit of work to do to get back to a place where lenders consider the person to be creditworthy.
The fact is that filing for bankruptcy can have a swift and dramatic impact on a person's credit score. Even those who have a relatively high score at the time of the bankruptcy filing -- say, 750 or above -- could see a decrease of 200 points or more. But, regardless of a person's credit score at the time of filing for bankruptcy, it is more likely than not that the filing will result in a credit score that is considered "bad credit" for a certain period of time.
However, the good news is that Escondido residents who file for bankruptcy can set up a path back toward creditworthiness with the right approach. Getting the right information about filing for bankruptcy and all of the pros and cons associated with this type of legal move is a good first step.
Source: St. Louis Post-Dispatch, "Worst-Case Scenario: What Does Bankruptcy Actually Do to My Credit Score?," Jeanine Skowronski, April 15, 2016