Post-Bankruptcy Survival: Your Credit Score Is Not What You Think

Just in case you weren’t confused enough about all the ways to monitor and possibly improve your credit score after bankruptcy, a report by the Consumer Financial Protection Bureau (CFPB) has revealed that the FICO score you see probably isn’t the same one lenders use.  According to the CFPB, FICO scores offered to consumers through TransUnion, Equifax and Experian are “educational” and may differ from scores used by lenders to determine creditworthiness.

While this may not be a big deal for consumers with excellent credit it can be a thorn in the side of debtors exiting bankruptcy who are rebuilding their credit rating one point at a time.  For post-bankruptcy debtors, every point on their FICO score can mean the difference between a loan acceptance and loan denial.  So what should a debtor exiting bankruptcy do if they want to find out where they really stand in terms of their credit rating?

Well the first thing debtors exiting bankruptcy should do is focus on adding good credit items to their credit report.  Taking out a secured credit card, buying a vehicle or taking out a personal loan will eventually “push down” old (and bad) credit if the debtor makes timely payments.  A debtor exiting bankruptcy who is repaying student loans in a timely manner, along with having a secured credit card in good standing and a year worth of on-time payments to a vehicle finance company is better situated than a post-bankruptcy debtor who avoids all debt.

If after applying for credit you are denied, the bank which denied you must let you know why you were denied and this includes revealing the credit score they used to make their decision. While receiving the “lender FICO” score after a loan denial won’t help you get credit right after bankruptcy, it will give you the information you need to make improvements to your credit rating in the future.