How much does a bankruptcy filing affect your FICO score? In the big picture, this may not be the right question to ask.
The answer to the bankruptcy question is: It depends on the individual. But it appears to be somewhere in the neighborhood of a 130 to 240 point drop, according to the data released by FICO. (We’ve checked. Nine years later FICO has not made any new numbers public, and we assume the numbers above are still good.) Though FYI, FICO stresses that the data is only a guide and the actual impact depends on the individual.
If you’re contemplating a bankruptcy filing in New York or anywhere else, however, how much it affects your credit score may not be the question on which to focus. Why? Because if you’re seriously considering bankruptcy as an option, then odds are you’re already in a difficult position and filing or not filing for bankruptcy won’t do much to hurt your score at that point anyway. In fact, one of the interesting things revealed by FICO is that the lower your credit score is, the less it is impacted by a bankruptcy filing.
If you file for bankruptcy, your credit score will be affected. But with your slate wiped clean, at least you have an opportunity to start rebuilding your credit. And many of our clients actually rebuild their credit rather quickly.
If you try to tough it out, you may avoid whatever affect bankruptcy has on your score in the short run. But if you’re laboring under significant debt and unable to make payments over time, then your credit score may be affected even more over time. Plus, you won’t have that clean slate to give you breathing room to get things in order.
If you’re not sure what the right option is for you, the best thing you can do to address the situation is to talk to an experienced and trustworthy bankruptcy lawyer in New York. A good bankruptcy lawyer with an established reputation is only going to recommend you file for bankruptcy if you really need to. They’re going to ask you questions and make sure you understand the ins and outs of all of your options.
Please feel free to contact me if you’d like a free initial bankruptcy consultation so you can start addressing your financial issues, getting your questions answered and getting your financial life back under control.
EMAIL Bruce Weiner
(718) 855-6840 (Local)
(866) 402-8476 (Toll Free)
Fax (718) 625-1966