Credit Score after 341

[ScaredINMich]

What is the process of the credit score drop? I know it drops when you file, but does it drop again after 341 and again after it's dismissed?

As of Feb of this year my score was 663. (It had already begun to drop due to our business failing and settling on Credit Cards prior to the BK. I don't know what it was prior to this)

Since then is has dropped 645, 636, and currently 627 the day after our 341. Will it stop going down or am I bound to see the 500s?

Thanks!!

[btbeme]

Short answer - you haven't seen anything yet. It will drop.

Second answer...really, what is the difference? Why care? Stop thinking of it as a "credit score" and understand that it is a DEBT score. Rebuilding a credit score after BK is a cautious process which takes time, but, really, do you NEED one for a while? Really? For what? In my opinion, the last thing you want after a BK is to go into debt - even a little - in order to rehab a "credit" score that will allow you to go deeper into debt the better it gets.

[Ihatebk]

I agree with btbeme, shoot for a "0" credit score and never get in dept again. Did you know that that you can save if you rent cheap apartment and put $1000 a month in a 10 year CD that yeilds 6.5% interest you will have $272,180.33 at the end of the 10 years.

Thats right you could pay cash for a $272K home.

If you buy a $272K home with 10% down payment ($27.5k dowm) on a 30 year fixed not of 4.875% of Your monthly payment will be $1473 with $108 PMI for first 15 years (total monthly payment of $1581 per month).

So guess what you are on the hook for $1581 per month for 30 years.

If you took that $27.5k that you were going to put down and bought a 5th wheel travel trailer and lived in it for 10 years, you could have the cash to buy the home at the end of the 10 years. And guess what, since it is all paid for now no one can foreclose on you and you will never have to worry about a BK again.....

[Flamingo]

You will find out that credit scores with a BK on your credit reports mean nothing to some lenders. As soon as they see the BK, you will get denied. What you need to do after your discharge is be as prudent as possible with your credit and know that time is your best friend in this process. Pay everything on time in the years following discharge - do not be late with anything. Apply for credit sporadicly and not all at one time and remember you will get denials. Hard credit inquiries stay on your credit reports for two years and if you apply for too much credit at one time, it does not look good to any potential lender (right out of BK and applying for more credit). Unfortunately, just as it is impossible to control speeders on the highway, it is impossible to advise folks right out of BK what is going to happen - everyone wants credit right away to rebuild and it really takes some time, sometimes several years, before one is comfortable.

[Amy26]

The score may drop below below 600 before you're discharged. My score before filing was in the mid 600's ...before my discharge it dropped to 598. However, as soon as my discharge was recorded it actually went back up into the low 600's. Then, as I rebuilt my credit it has steadily gone up over the last year and a half and its almost 700 now which is better than before I filed.

You will get some denials but you will also get approvals if you know where to go. Not every bank/credit union or lender will turn you down just cause of the BK.

[HHM]

Generally, once the discharge comes through, that is when you see the final results. The 341 date has no bearing on credit report. Some creditors report the BK upon filing, others upon discharge. etc.

How far it drops, or if it drops, depends on your situation going in. If the score is really low (below 600), BK will usually improve the score or it wont drop. If your score is over 700 going into BK (rare, but it happens), the score will drop 100+ points. If you are already in the 6's, it will go down some.

[ScaredINMich]

Thanks for your responses.

I know for most things it doesn't really matter, but we have young children, still have our jobs and will want to get a permanent house soon. I know we are looking at 3 years for a traditional mortgage, but we'd like to build our credit as much as possible to get a good land contract or something.

Just trying to rebuild. The hard part for us is that this BK is all due to a failed business. Our personal debt was minimal.

[Peeps]

put $1000 a month in a 10 year CD that yeilds 6.5% interest you will have $272,180.33 at the end of the 10 years.

Well I'm just gonna flaunt my ignorance for everyone to see because this is really interesting and I'd sure like to hear more.

Do banks let you add money to a CD? I guess I was under the impression that it was sort of a one-time-contribution thing. Does anyone know of a resource that helps seriously financially-stunted peeps like me learn more about CDs for post BK financial planning?

[HHM]

Well I'm just gonna flaunt my ignorance for everyone to see because this is really interesting and I'd sure like to hear more.

Do banks let you add money to a CD? I guess I was under the impression that it was sort of a one-time-contribution thing. Does anyone know of a resource that helps seriously financially-stunted peeps like me learn more about CDs for post BK financial planning?

Good point, plus, no bank right now has a 6.5% CD that I am aware of, but the overall point about the lost opportunity of money is valid...it is possible to pay cash for a house with discipline. If you aggressively saved from age 18-28, invested the savings religiously, in most parts of the country, you would have enough to buy a house outright, or have so much of a down payment, that the monthly payment would be a minimal part of your budget. The kicker is that then you can save even more money during your 30',s 40's and 50's because you are not devoting 30% or more of your income to housing. The reason people scoff at the idea is because of cultural conditioning. We suffer from a a "want it now" mentality. Unfortunately, we see even on this forum. Got the "I was approved by threads" and there are dozens of knuckleheads that have made lousy choices on buying cars right out of Bk.

[Amy26]

Ah...I was wondering when the judgement would show up again.

<<<< Proud knucklehead right here man!!!