What's worse, old baddies or recently discharged BK?

[Anonymous]

I keep seeing people who have recently gone through BK with higher scores than me.  I have a some 30 day lates that are all over a year and a half old, and I also have some 120 day lates on my old SL TLs (those should be coming off soon).  My UTL is too high, but it still seems like I would be less of a lending risk than someone who had a BK discharged last year.

[tiger_uppercut]

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@Anonymous wrote:

I keep seeing people who have recently gone through BK with higher scores than me.  I have a some 30 day lates that are all over a year and a half old, and I also have some 120 day lates on my old SL TLs (those should be coming off soon).  My UTL is too high, but it still seems like I would be less of a lending risk than someone who had a BK discharged last year.

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I have asked this myself around here recently, after seeing people with recent bankruptcies with scores in the high 6s/low 7s, while I feel like I'm arm wrestling an alligator to get above 600. The answer I got was due to the fact that you can't file bankruptcy again for 10 years (iirc), the companies know they won't get discharged any time soon. So the bankruptcy people are seen as less risk than people with open collections, charge offs, etc. who MIGHT file at any time.

It can seem a bit unfair (although BK has its own pitfalls), but thats the reason I was given. Someone else might be able to provide more insight.

[redbeard]

I agree with you..... but....

and its a big but......

we don't write the score formula

On the other hand, realize that your score is only a small part of what gets you credit.  Its your full file that gets you credit, the score sort of determines the interest rate you get.  Some creditors won't look at someone with a recent bankruptcy, regardless of what their score is.  Some won't look at someone with a recent foreclosure / repossession, regardless of score.  Others will.

Bankruptcy is a reset.  There is probably really good stats on people who have gone through bankruptcy and what the redefault rate is vs people who struggled a few years ago and what their redefault rate is.  Doesn't mean you are a stat, but I'm assuming someone has looked at the numbers in a big picture sort of way.

Keep in mind that you (and I) struggled in a serious way a few years back.  We got back on our feet and are working to make everyone whole.  Something comes up, we still have the bankruptcy option open to us, which is probably why the score drags a bit.  Someone that just went through a bankruptcy doesn't have that option again (normally).

Solve what you can.  Fix what can be fixed.  Let time fix the rest.  But most of all, stay on top of things moving forward.  

Dan

[gdale6]

A BK will overshadow old lates.

[Anonymous]

Really, the answer is pretty simple - the reason people with recent BK's seem to be able to rebuild quickly and get offered credit readily is BECAUSE the BK is recent. Thats means that they CANNOT file again for 8 more years so if they again default a lawsuit is far more collectible. Many creditors hesitate to sue a debtor thats clearly underwater for fear of driving them straight into BK. Thats exactly what happened to me in 2007 - I got sued by a CA whose greed overrode their common sense. OTOH, when I had problems recently, creditors quite literally came out of the woodwork with lawsuits a year before my BK limitation expired - most of the debts less than a year old.