Credit After Bankruptcy discharge: study
A study from LendingTree says that people can have higher credit after bankruptcy discharge than they did prior. It says that almost half can qualify to buy a house just one year later. Further, it said almost two-thirds would have decent credit to finance a home or car two years after discharge.
- Forty-three percent of people with a bankruptcy on their credit file have a credit score of 640 or higher within a year of the bankruptcy. Within two years of bankruptcy, 65 percent have a credit score above 640.
- A typical $15,000 auto loan incurs an extra $2,171 in borrowing costs for those seeking offers less than a year after bankruptcy, but just $799 for those who wait at least two years after bankruptcy.
- Borrowers who have a 3-year-old bankruptcy and apply for a mortgage see an offered APR that is 19 basis points higher than those without a bankruptcy. The higher the APR, the higher borrowing costs will be.
- Mortgage borrowers with scores between 720 and 739 three years after bankruptcy were offered similar APRs to those without bankruptcy, indicating a strong credit score can counteract the effects of a prior bankruptcy.
All this goes to show that there is credit after bankruptcy discharge. People shouldn’t feel that their bad credit and high debt ratio is the end. A Chapter 7 or Chapter 13 bankruptcy can be the start of the road to recovery to rebuilt credit after bankruptcy discharge.