General Theory & ponderings

[Twinkle]

I understand that BK is intended to give people a fresh start. On the forums, I hear people talking about their pre-filing credit ratings. It would seem to me, if you get completely free of all debts (so no mortgage or car payment, no student loans, no loans that couldn't be discharged, your credit should/would go back to where it was on the day you turned 18.

Is that how it should work?

If you run your credit on your 18th birthday (the first day you are eligible to have credit), what would it say for a "score"?

How much does your previous credit history (barring the BK) weigh on your post post-bk history?

Just some things I was thinking about as I get ready to file Chapter 7 pro se

Are there any other interesting facts or tidbits or head-scratchers about bankruptcy in the U.S.?

[AngelinaCat]

Well, for starters, an 18 year old would not have a credit rating, because he/she had not applied for or gotten any credit before their 18th birthday.

When I went away to college for my Junior and Senior years--my Freshman and Sophomore years were spent at a local junior college at home--my Mother and I went to our bank and she talked to a bank officer that she knew well, and we got me my first credit card with a $300.00 limit. This was in 1972, and I was not yet 20. AT the time, the legal age of adulthood was 21. Whenever I used the card, I always paid it off and almost never carried a balance. I also never asked for an increase in the $300.00 limit.

Fast-forward to 1987, when my fiance, 'Hub and I sought to get a loan to purchase a mobile home to move me out onto my ancestral property. I was turned down because I had no credit history. I had always paid cash for things, or used that small credit card, and paid it off. 'Hub did persuade me to get the limit increased to $1,000.00, which I did.

When we married, I then combined my funds with his and then got a card with him on which I was an Authorized User. Then we started doing things and started living beyond our means, as we both had very good jobs. Then we hit a few roadblocks and obstacles on the way.....

But no, you don't start out with a Credit Score of 800; you have to earn it. At least that is my understanding of how it works.

[Nursemikki]

I think you may be oversimplifying things a bit. Unfortunately I personally have known a few young adults that made it to their college years with a trashed credit score since their parent/guardian has put household utilities in their name and slacked on paying the bill. I think we start with a midrange FICO score and that goes up or down based on factors like type of accounts, amount of usage of available credit, credit checks, and of course payment history.

[Twinkle]

Yeah- I imagine there is a median score, and you can go up or down..... I just ran my credit reports, and saw that they have had record of me from about 1 or 2 months before my 18th birthday.

It's just interesting to think about. I guess I am mostly thinking about whether or not you actually get a fresh start.

[AngelinaCat]

I think you may be oversimplifying things a bit. Unfortunately I personally have known a few young adults that made it to their college years with a trashed credit score since their parent/guardian has put household utilities in their name and slacked on paying the bill. I think we start with a midrange FICO score and that goes up or down based on factors like type of accounts, amount of usage of available credit, credit checks, and of course payment history.

I just related how it worked out for me. No, I didn't have unscrupulous parents who put things in my name.

[df04527]

Having worked in that industry for 5 years, unless it is changed, you will have no score at all. Unscored across all the bureaus. I have had many clients with no score on their mortgage broker reports due to no past history.

[TheBajan]

Having worked in that industry for 5 years, unless it is changed, you will have no score at all. Unscored across all the bureaus. I have had many clients with no score on their mortgage broker reports due to no past history.

This has been my understanding also. In addition, if you stop using credit completely (no mortgage, no loans of any kind) after a period of time you will once again have no credit score. I don't know if that takes 7 years or 10 years or longer but that is my understanding of how it works.

Welcome to the forum.

[AngelinaCat]

Having worked in that industry for 5 years, unless it is changed, you will have no score at all. Unscored across all the bureaus. I have had many clients with no score on their mortgage broker reports due to no past history.

This is the way I understood it.

I did eventually get a mortgage when we built our house in 1987. But it all had to be in my name with my employment, because 'Hub and I weren't married at the time. For collateral I had a BIG chunk of land, which the lender loved.

ETA: This land was inherited from my father and aunt. It had no mortgage on it. I also inherited a paid for house from my mother, that I was moving from. We put that up for sale.

So I had no credit history.

[keepmine]

Yeah- I imagine there is a median score, and you can go up or down..... I just ran my credit reports, and saw that they have had record of me from about 1 or 2 months before my 18th birthday.

It's just interesting to think about. I guess I am mostly thinking about whether or not you actually get a fresh start.

I'm of the opinion that a fresh start has nothing to do with a credit score.
The fresh start comes from having overwhelming debt levels discharged and actually have money to save/invest.

[Pjmax]

You do get a fresh start in that you are no longer responsible for the discharged debts. You no longer owe anything, but much of your history remains on your credit reports. It will take some time to build up your score.

[LadyInTheRed]

Your pre BK credit history will still be on your credit report and your discharged debts will appear as included in BK. BK does not clear info from your report.

[AngelinaCatHub]

You do get a fresh start in that you are no longer responsible for the discharged debts. You no longer owe anything, but much of your history remains on your credit reports. It will take some time to build up your score.

PJ, not to nitpick but may I say that your post is partially right and partially in error. It is not that you do not "owe" the debts that have been discharged. You do owe what you have borrowed.

Society has long ago, realized that things can go wrong and took away things such as debtor's prisons, and indentured servitude. The debt is legally forgiven as to penalty for not paying it. The fact that we over borrowed still means we used other peoples resources.

Our duty then to society for our forefathers thought of a "new start" is not to make those same mistakes that caused our breach of trust to the lender. The new start is just what it means. It allows us to rethink and learn by our mistakes of the past. It does not raise a credit score as our BK is history, not a prize. This is one reason Mrs. and I do not borrow from anyone or anything. It is too easy to fall onto that slippery slope of "instant gratification" for the want of "things". Things wear out, rust, go out of date, but those bills cause worry and servitude to another. Not worth selling your freedom for things.

Sorry for being so nit-picky, but I had to voice my opinion that the debt is still owed, but forgiven by law. 'Hub

[Nursemikki]

I wasn't implying you did AngelinaCat, neither did I. I fully ruined my credit on my own. My response was to the original poster.

I just related how it worked out for me. No, I didn't have unscrupulous parents who put things in my name.

[Pizza]

Payments that you are still making through the bankruptcy will continue to appear as positive payment history. All the bad credit will still be on the report (idly + IIB), and as it ages, the good eventually outweighs the bad.

The OP's comparison is really apples to oranges. Nothing influences a non-existent credit score.

[AngelinaCat]

I wasn't implying you did AngelinaCat, neither did I. I fully ruined my credit on my own. My response was to the original poster.

Hi Nursemikki: Not a problem, though it would have helped if you had used the quote feature for the OP. I was feeling a little bit 'scalded'. I apologize.