What Happens To Your Credit Score When You File For Bankruptcy?

Your credit score is going to go down, but you can build it back. It's not the end of the world.

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Transcript

A common question about bankruptcy is what exactly is going to happen to my credit score after I file bankruptcy?

The truth is nobody really knows. Each different credit reporting agency has an algorithm that we can't know and each of them scores it slightly differently, and of course, it also matters where your credit was and what was on your credit before you filed bankruptcy.

Having said all of that, it's about an 80 to 100 point drop in your credit when you file bankruptcy. And how fast you recover from that is a function of how well you're coached and how careful you are with your credit after that. And one of the things that we do with folks who file bankruptcy with us is help them rebuild their credit, show them how, tell them how, and tell them what steps to take. So you can get your credit back fairly quickly. There are steps that you can take and you can buy a car almost immediately after you file bankruptcy. People will use your address from the bankruptcy filing to send you offers to borrow money to buy cars, and after about a year, if you've taken the right steps and gotten good coaching, you can buy a house.

So your credit score is going to go down, but you can build it back. It's not the end of the world.