I have had bankruptcy clients who have been overly concerned with their credit score before, during, and after they have filed for bankruptcy. The credit industry, including the credit bureaus and the credit protectors, have done a great job of marketing to Americans the importance of having a good credit score. What they fail to do is to advise you that the amount of debt you are caring in relation to your score is also very important.
I would much rather have a lower credit score and zero debt than to have a great credit score with overwhelming, outstanding debt. It is also amazing that most bankruptcy clients feel the need to share with their bankruptcy attorney the fact that they had a particular score in the past or that they have a particular score now as if it somehow softens the blow of being in debt. I personally advise my bankruptcy clients to not be overly concerned with a credit score. This is especially true with clients who already have a home mortgage, a financed vehicle, or other types of credit that will survive the bankruptcy filing. Credit will repair itself in the ordinary course if a person engages in good credit activity going forward. It is not something that you want to rush. It is not something that you want to be overly concerned about if you don’t have a good score. It is something that you want to develop slowly over an extended period of years.
I recently spoke with the bankruptcy client a few years back who also has a foreclosure case. He was concerned about the foreclosure on his credit report after he has already spent years rebuilding his credit after his bankruptcy case. He also noted that some of his foreclosure actions did not make a credit bureau and he was concerned about whether this current one would. I advised him that despite the fact that the foreclosure may hit his credit bureau, he does not have to fear his credit score. After all, the underlying debt was discharged in his chapter 7 bankruptcy case and he has done a nice job in rebuilding his credit since that time. If the foreclosure does appear on his credit report and it does force a lower score temporarily, he will have an opportunity to rebuild just as he did after bankruptcy.
In closing, I want to stress that credit is important in this life. It changes the total amount that you will pay over the life of a purchase due to the interest rate being higher or lower. However, the credit score is just an indication at the present time as to how credit worthy you are in the eyes of lenders. You can improve this fact over time. Thus, you don’t have to be overwhelmed or overburdened with the fact that your score may not be where you think it should be or the industry states it should be to be creditworthy. If you just allow time to pass and continue with your good conduct after a bankruptcy, you will see your credit score rise and you will get opportunities for credit once again.
