Understanding Your FICO Score And Chapter 7 Bankruptcy

If you are contemplating filing for chapter 7 bankruptcy protection, then it is vital that you understand how it will affect your FICO credit score. By gaining a better understanding of your FICO score, you will be able to financially recover from your bankruptcy filing more quickly. In addition, you will have less anxiety about the unknown when you clearly understand what will happen to your score post-bankruptcy.

Fair Isaac Company and FICO Scores

The acronym FICO stands for the Fair Isaac Company. Fair Isaac Company is a financial software business that is located in San Jose, California. FICO's claim to fame is the credit scores that they generate based upon their software product.

Every American who has applied for any form of credit has a credit report. These credit reports are fed from each of the three credit reporting agencies into FICO's software. The FICO software then spits out a FICO score.

Your FICO score is used by lenders, insurance companies, and employers as a judge of your financial creditworthiness and character.

FICO Scores and Chapter 7 Bankruptcy

If you are thinking of filing for bankruptcy because many of your credit accounts are delinquent or in collections, then your credit score is likely already very low. Filing for bankruptcy will cause your score to drop even lower, but after time there are things that you can do to increase your FICO score back into a favorable range.

If all of your accounts are being paid on time but your debt is oppressive, then your credit score may be a factor in your decision about filing for bankruptcy. When you file for bankruptcy, it is a guarantee that your score will plummet.

Increasing Your FICO Score Post-Bankruptcy

Once you have filed for chapter 7 bankruptcy protection, your credit score will hit the lowest point possible. While this isn't fun, it is actually helpful to know that you are at the bottom—and it can't drop lower. 

The good news is that you can easily rebuild your credit post-bankruptcy. Some examples of ways to do this include

  • getting a secured credit card 
  • getting a store credit card 
  • opening a low-limit credit card

In addition to slowly obtaining new credit, it is vital that you make all payments on time. Over time, those regular payments will help to increase your FICO score.


By understanding your FICO score and what your chapter 7 bankruptcy will to do your ability to obtain future credit, you can rid yourself of the anxiety that comes with the unknown. 

For more information about your FICO score and filing for bankruptcy, you can speak with a local chapter 7 bankruptcy attorney, one like Morrison & Murff, in your area.