Post Chapter 13 credit ratings

[shipo]

Hey gang,

After doing lots of studying during my Chapter 13 (the kind where 100% of my DMI was paid to the Trustee, but my unsecured creditors were far from whole), I was expecting my credit rating to tank immediately after my discharge, and by "tank" I mean, dip into the 500s or lower. Yeah, about that. Yesterday I found out my discharge came through on Wednesday and so I checked Equifax to see what the damage was. Would you believe 714 for Equifax, 713 for TransUnion, and "Unavailable" for Experian? I'm bumfuzzeled. Should I expect that credit rating to gradually drop for say, the next 90 days before it finally bottoms out?

[justbroke]

Since credit scores, and particularly FICO scores, are so fact and person-specific I can only generally say some things. In order to have those scores, some bad things may have dropped off and the good things are still there. If those are FICO 8 or FICO 9 scores, then your post-discharge Chapter 13 scores are better than most. Many people coming out from Chapter 13 are in the 640-660 range. A lot depends on rebuilding credit during the Chapter 13. Significant help can come to those that are authorized users (AU) on very long reporting accounts (bumping up the average age of accounts).

Since your scores are in the 700s -- which is good -- I highly advise that you don't mess it up by starting to dispute things. The removal of a single "aged" account (derogatory or not) can wreak havoc with your score. I just paid off an installment loan because there was only like $100 left on it but the next payment wasn't due until 2022. My score went down 10 points because I then had no open installment loans.

My suggestion, rejoice and don't touch anything!

(Some debtors that had excellent scores -- in the mid-high 700s -- the day before filing usually see a bigger bump and can find themselves back into the low 700s after discharge. Your credit profile is what counts.)

[shipo]

Interesting; thanks for the advice. Funny thing though, through my Chapter 13, I had zero access to any credit instruments what-so-ever. I entered with a paid off car and exited with a paid off car and I have had zero access to any credit cards since 2013. Regardless, your advice is great; I'm not going to poke the bear and once the closure takes place, I'm going to apply for a card to start rebuilding my credit.

[Faith527]

shipo Congratulations on a great score! You worked hard for that!

[sophieanne]

shipo - agree with Faith527...Congratulations...hopefully you go even higher now