Discharge Affect on Credit Report....how much?

[hanginginmd]

Predischarge we are sitting at an average of 685......how much can we expect the score to go up when the discharge is recorded and becomes official?

[kornellred]

Probably not at all. A bankruptcy has already had it's effect on credit rating and it will have an effect for many years. The discharge has no bearing on a debtor becoming a better credit risk.

[bcohen]

Probably not at all. A bankruptcy has already had it's effect on credit rating and it will have an effect for many years. The discharge has no bearing on a debtor becoming a better credit risk.

That's silly. Most people who file for BK see their credit scores increase, however that is because their scores were very low prior to filing. Discharging all of your debt in bankruptcy does make you a better credit risk, and the credit scoring models will reflect that. Once a person has discharged all their debts, they can more easily pay any new debts, and they cannot file again for at least 8 years.

Now in your case, with a score of 685 prior to filing, that means that you did not have any defaulted/charged-off debts to begin with, so after taking into account the "bankruptcy penalty", your credit score will probably go down a little bit.

[kornellred]

I think you misunderstood the OP's question. Their score is 685 prior to discharge, not prior to filing. They want to know if the actual discharge will make an upward difference in their credit score. I myself have a FICO score of 690 and I have just completed my Chapter 13 and am awaiting the actual discharge from the BK court. It is taking forever, but I will let you know if my credit score goes up when I finally get the discharge.

[hanginginmd]

Exactly......we are 685 prior to discharge not filing.....Thanks Kornell!

[HHM]

No affect that I am aware of. The primary entry that the score is keyed from is the BK filing. Discharge is largely irrelevant for scoring purposes. Look at it this way, from the creditors perspective, you just screwed them out of a bunch of money, why would you get a bonus if you were successful at it

Also, keep in mind, with the BK on your credit report, your score is not as relevant in the short term for major credit transactions. Hypothetically, if you could manage a 720 score 1 year after BK, you still couldn't get a mortgage because you are less than 2 years from BK.

[kornellred]

HHM - I am pre-qualified for a VA mortgage. The reason I have not completed the application is because I am waiting for the hard copy of my Chapter 13 discharge from the court. FHA and VA underwriters require written permission from the trustee, which I cannot get without incurring attorney fees. Only Chapter 7 debtors are required to wait a hard 24 months post-discharge before they can obtain a mortgage.

[HHM]

That is great Korn, but that has NOTHING to do with the OP's question.

[kornellred]

Yes, I understand that - I only mentioned it based upon the last sentence in your response. I guess that amounts to inadvertent "hijacking" of a thread, for which I apologize.

[HHM]

Korn

Note, the inability to get a mortgage with chapter 13 BK is generally the case...it just so happens that FHA, and a few others have "specific" programs for a chapter 13 scenario. It is not as if you can "just get a mortgage" and be in chapter 13. You have to qualify for the ONE offer from FHA or VA that applies to that circumstance.

No offense Korn, but the information you provided, without additional clarification, is misleading to the OP's question.

[kornellred]

I am not offended, HHM. I needed correction, and I got it!