Bankruptcies: Impact on FICO Scores Chapter 7 & 13

Understanding Bankruptcies Impact on FICO Scores

The formula used for FICO scoring treats both Chapter 7 and Chapter 13 bankruptcies similarly. It considers these two forms of bankruptcy as having the same level of severity, myFICO says.

Both types are considered in this manner due to research conducted by Fair Isaac Corporation (FICO), which found these are similarly predictive in assessing future creditworthiness.

As with other negative credit information, the effect of a bankruptcy on a FICO score will diminish over time, according to my FICO.  

Named one of the most widely used credit scores, FICO Scores can influence credit and loan approvals and what terms and interest rates a customer may qualify for.

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Conclusion:

Navigating the intricate world of credit scores can be challenging, but being informed is half the battle. Recognizing the implications of Chapter 7 and Chapter 13 bankruptcies on FICO scores is essential for those rebuilding their credit. As with many credit setbacks, time and consistent positive financial behavior can help mend the impact. For deeper insights and strategies on credit repair, delve into the resources available at ScoreCEO.

 

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