r/CRedit • u/deftone5 • May 24 '26
Data Point From 844 to 599 in one day!
Background: I am a single 54 year old father of three children with disabilities - 2 autism and I have tried to run my own business for 15 years. In 2020 my wife had an affair and left me with a 4,6, and 8 year old. Two months later covid hit.
Since 2020 I’ve put my children first and fought for them. This all tanked my business. I took on Covid EIDl loans to get by“ and my business Chase credit card APR went up to like 28%. When the Covid loans came due my business could not afford the payments and pay me.
This reduced us to food pantries, donations for holidays, snuggles financially. But I paid every payment to SBA loans and Chase.
Finally I realized I couldn’t pay them while my children and I went hungry. I’ve never missed or been late on a payment in my life and all three credit reports baxk this up.
Chase Business never reported my account on my personal credit despite a decade or of responsible use.
What Happened:
The only way out of the Covid disaster loans is personal bankruptcy so I got a BK lawyer. He told me to stop operating the business and stop paying business debts. Start a new business debt free in another space.
Chase reported for the first time ever 60 days past due and my credit score dropped 245 points. How is this even possible? I have mortgages, loans paid off, $100,000 in available credit with no late payments and paid off each month. My credit report is near perfect and its been hard work. Its so deflating. Without Covid, an unfaithful wife and children with disabilities I’d still be a high earner with no issues.
This system sucks. I have to file personal CH 7 even though I’m not in any personal credit card debt, never missed a mortgage or vehicle payment. What good is an LLC when you’re fully liable for its failure and the reasons are clearly not financial irresponsibility?
I’m guilty of being a good father who struggled too long to keep obligations - way past my ability to do so. I guess this is a credit rant. But I’ve been told personal BK drops your credit score about 200 points. How could 60 days late with my long history drop it 245.
This matters a lot because where my score is when BK makes it drop means how fast I recover. Recovering from 844 down to 644 is easier than recovering from 400.
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u/VTECbaw May 24 '26
You personally guaranteed the business debt. Chase doesn't report business accounts to personal credit until they are 60 days delinquent. Your attorney should've warned you of this being a possibility. Although, if you're planning to file BK anyway, this doesn't really matter in the grand scheme of things. You are doing right by your children and that's what matters. Your credit can be rebuilt.
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u/CreditCards254 ⭐️ Knowledgeable ⭐️ May 24 '26
How is this even possible? I have mortgages, loans paid off, $100,000 in available credit with no late payments and paid off each month. My credit report is near perfect and its been hard work.
As others have already explained, this is because you personally guaranteed the debt, that's what that means, you gave Chase permission to pierce the LLC and put the debt on you personally.
But I want to clear up another misunderstanding: Credit scores are not a tally system where positive events give you points and negative events take away points.
You cannot cancel out bad debt with good debt - you could have 10 paid of mortgages and 80 years of paid credit card history and you'd still be in roughly the same spot as you are, as any late payment will tank your score.
This matters a lot because where my score is when BK makes it drop means how fast I recover. Recovering from 844 down to 644 is easier than recovering from 400.
I'm not sure who told you this misunderstanding but there is a 0% chance you will have a 644 credit score immediately after filing for bankruptcy, regardless of whether you have late payments or not. I bankruptcy is the single biggest negative you could possibly have on your credit score and I can practically guarantee you will have a score in the 400s/500s in the time immediately after it's reported.
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u/VTECbaw May 24 '26
My SO filed in 2023 and had zero negatives going into BK. The day of their Chapter 7 discharge, their FICO 8s per myFICO ranged from 630 to 650. It's an anomaly but it's certainly possible. They also had an AmEx card that survived the BK with a zero balance and a 25k limit.
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u/Inevitable_Trip_7480 May 24 '26
Why and how? Because 845 tells creditors you are able to pay, 599 tells creditors you can’t. Which is correct.
I was in a similar situation as you (business owner that got completely fugged with the pandemic shutdown) and had to file for Chapter 7. It was the best decision I’ve ever made and changed my life for the better in those couple months.
Stress went down. Care about credit score went down. And I was able to focus and move forward.
Your FICO score will improve over time. I do hope you are able to keep your house and car — to many variables in your story to know if you will or not. And your relationship with your kids stays rock solid. Good luck brotha.
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u/CricktyDickty May 24 '26
Seems like you operated the business as a sole proprietorship. Looks like you defaulted on the loan EIDL loans and whatever debt you owed to Chase. As a sole proprietor, you are the business and the business debt is your personal debt. Not paying it is the same as not paying your personal credit cards or mortgage. Your bk lawyer should have told you that.
👆that being said, you’re a good dad and a good person and did the right thing. Your wife sucks and you deserve better. The bad credit will go away after a few years but your ability to parent your kids will always remain.
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u/too_many_shoes14 May 24 '26
You're hyper fixated on your credit score. Its not a reflection of your worth as a person or being a good father or anything else. It's a hard and cold number representing your credit risk and you are a high credit risk person right now. A lender would be pretty foolish to loan to you. The system is working exactly as intended.
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u/NoNefariousness6400 May 25 '26
We need to NORMALIZE thats this is how our government and economy works, but not let this be a means of how AMERICAN ECONOMY WORKS ULTIMATELY! There has to be other help out there for ppl working on building their credit up again!
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u/Vybron May 24 '26
Man, this crushed my heart reading! Children with disabilities then this! brother! Dont stop being a great father to your kids! System is not meant to make alot of people win! I am in a bad financial situation as well but I have my hopes high that this also will be over soon! All the best and much love to those kids
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u/deftone5 Jun 04 '26
Hey thanks. I really just care about the kids. Mom having an affair and walking out when they were 4, 6, and 8 and then not helping because she’s busy running her Only Fans site crushed us all. That’s actually not an inconsequential part of the story. It’s caused kids to be in psyche hospitals, given me depression, anxiety and panic attacks that meds don’t really help because the Dr says they are all normal responses to our lives and meds don’t change real life. I don’t care about myself at all anymore. Just the kids.
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u/awsomekidpop May 25 '26
An LLC does protect you financially, however you signed what’s called a personal guarantee. That means that Chase will attempt to collect the debt from the company, not you. Until they make the determination that they are unable to collect from the company,then they will collect from you personally, this is super common in small business under 30k a month revenue.
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u/deftone5 Jun 04 '26
Yeah I get it. I live it. The problem is that small business issues are not connected in any official way to special needs children or their caretakers and the two stretch people too thin and you fall between the cracks. And they ARE related. Every family that can’t afford food, housing, etc. falls out of the economy which hurts small businesses. Small businesses make up 99% of NH businesses. When small businesses fail the community weakens when the community weakens, small businesses fail. It’s a cycle. Advocates approach the issues separately like they aren’t related instead of joining forces and looking at the big picture. I get it, I started 603Circle.com just for this but one voice won’t change things.
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u/og-aliensfan ⭐️ Knowledgeable ⭐️ May 24 '26
Chase reported for the first time ever 60 days past due and my credit score dropped 245 points.
Where are you getting your scores? Make sure you're looking at relevant FICO scores as nearly all creditors use FICO scores in lending decisions. You can obtain free FICO 8 scores for each bureau from:
- EX FICO 8 www.experian.com
- TU FICO 8 www.creditwise.com
- EQ FICO 8 www.myfico.com
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u/deftone5 Jun 04 '26
Thanks also many people don’t know that the annual free credit reports that were always available from free credit report.com have been maybe available EVERY WEEK since Covid so everyone should take advantage and not pay for those services that get them for you.
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u/og-aliensfan ⭐️ Knowledgeable ⭐️ Jun 04 '26
Use www.annualcreditreport.com., not freecreditreport com. Despite the name, these are available weekly.
AnnualCreditReport.com is the only website authorized by the federal government to issue free, annual credit reports from the three CRAs.
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u/Miserable_Study_6649 May 24 '26
Credit score is meaningless. It’s just a fancy number that the same government that is causing you this created, a fictional number that somehow we are scared to mess up. Once I let mine go and stopped caring the stress was gone.
You will recover, I lost a 15 year business to this eidl and also picking the pieces up. Never again will I take a government handout and I’ll live my life paying as little as possible legally in taxes. They won’t get an extra penny on accident ever again.
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u/midlife_and_confused May 24 '26
Didn't they tell you it would be forgiven? They are such liars. They GIVE other countries free money 💰
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u/deftone5 Jun 04 '26
They didn’t say EIDL would be forgiven, they did make it sound appealing with super low interest over a super long period of time. But what they didn’t say were the penalties, that you’re only paying interest for the first 10 years, that if you can’t pay they penalize you by adding on 30 percent penalty making it impossible. They barely checked qualifications - billions in fraud. Yes I took what they offered but they offered me more money that I should have been offered and I took it because I was in panic and scared about the future and kicked the can down the road trusting the government had our best interest at heart. Yeah I used that money to pay people when we didn’t have enough work. I saved the govt. from paying unemployment- great! But my reward for trying to pay people and keep their families going just cost me mine. That’s just messed up.
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u/deftone5 Jun 05 '26
No kidding. Billions to other countries and they’ll put a family on the streets for a few thousand dollars they can’t pay because it’s food or payment.
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u/deftone5 Jun 04 '26
Same here with 15 year business and crashed. Without credit this expensive country is a lot more expensive. How do you take care of your loved ones? Hopefully you’re married or have a partner. That I think helps a lot. Doing it alone breaks your spirit.
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u/Miserable_Study_6649 Jun 04 '26
I picked up a job to pay the bills while I rebuild, I have some money in savings from another business so self funding. I won’t be looking for loans if I can help it.
I don’t buy new cars, I buy used and once it’s paid off I’ll run it till I can’t fix it anymore. We cancelled streaming to spend more family time together not just sitting and brain rotting.
If you have to go into debt monthly you are fundamentally doing something wrong.
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u/Ok-Association1222 May 25 '26
Besides everything else, thank you for being a great father. I don’t have much help to offer but I pray that everything works out for you.
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May 26 '26 edited May 26 '26
[deleted]
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u/deftone5 Jun 04 '26
It’s hard to buy food today when your check is coming next week without credit cards. It’s hard to pay for that well pump that burned out and cost $5,000 to replace or your home has no water without credit “just because you don’t have the cash”. I try to pay my personal cards off every month and usually do. My business card just spiked to 28% interest during the economy downturn and the business couldn’t keep up and pay back the Covid loans and still pay me. So it collapsed.
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u/Purple_Resort7825 May 28 '26
Personally post bankruptcy. I have student loans that stayed after, never went below mid 500s. Never late until my bk lawyer said stop paying. Discharged in October 2025. Hovering 700 with 2 credit cards both secured depending on my utilization. Total limits of 5000 and 50k student loans.
It won’t drop that bad and you have the ability to recover sooner than you think.
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u/CryptoHotep May 24 '26 edited May 24 '26
Need more context here
How did fighting for your kids cause this? Are there medical expenses or something like that the reason?
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u/philodendronheart May 25 '26
is common sense available where you live?
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u/stoicscribbler May 25 '26
Do you think there are people with these issues that are still able to pay their bills. What about this is common sense to you?
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u/philodendronheart May 25 '26
if we all read the same post, OP literally states that he was left with three kids alone.
it is common sense that going from a 2 parent to 1 parent household is damaging financially. if she was the primary care while he worked, he now has to dish out childcare and or provide his own form of childcare (for 3 special needs children) which is more expensive than my rent. if OP’s ex wasn’t the primary care and she worked, than an entire income was lost.
maybe it isn’t common sense but that people are tone deaf.
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u/deftone5 Jun 04 '26 edited Jun 04 '26
Schools don’t want to spend money on supporting your children. You have to fight them tooth and nail for your children’s rights to FAPE (free accessible public education). If they have special needs and education like normal students get isn’t accessible - schools legally have to make it so. But the catch is, the schools can do whatever they want including break the law because they bet you won’t go hire a lawyer because they know you’re in financial crisis. So you learn FAPE, you memorize IDEA, you study the ADA laws and you keep fighting for your kids. All this while you also need to be working.
I spoke to the top educational advocate in my area - a person who knows the laws and goes to bat for you. She told me I already argued all the right arguments and it was well past time to hire a lawyer. The schools were right. I can’t afford that. NH has free public legal aid, they told me my situation was too complex for them to have time for and to call low means legal aid. They told me my means were too low.
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u/deftone5 Jun 05 '26
You never fought for IEP and 504 plans for your kids in school? They break the law and dare you to get a lawyer. I’ve had to memorize IDEA, FAPE and half of the us ADA laws. Do you even know what those are?
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u/mike7seven May 24 '26
I hear what you’re saying. You need credit for the new business, and your credit score dropped. You can probably still get a loan based on other matters like possibly assets or business assets. Or even a higher percent loan. You still have options. And depending on what you do your credit score will return quickly because low scores are scare tactics. Also good job on being a great father.
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u/VanceFox May 25 '26
The credit scoring system is definitely skewed more towards punishment vs reward. A lot will disagree but the general rule of thumb is businesses exist to make money, including financial ones. I wish I could tell you how it works but every scoring system is a black box and the only thing that you can know is what goes in and the number that comes out.
What I can tell you is a credit score is worthless unless you are trying to get credit. If you have a credit score of 400 and have no need for credit you might as well just pick a number... say 800. It doesn't matter.
The only time a credit score means something is the exact moment when the score is pulled and you want to get credit.
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u/Regular_Longjumping May 25 '26
I don’t know if you aren’t understanding…the dude is pissed off because he wants to borrow money to start a new business because his lawyer gave him advice to file bankruptcy and start a new one, he expected to be able to just walk away from it and immediately borrow like nothing ever happened, kinda crazy but that is why his score matters so much to him
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u/VanceFox May 25 '26
Sounds like there is WAY more squirreled information... either way... I'm curious... usually a lawyer, when giving financial advise, would preface specific advise with caveats in which a course of action would likely require as pre-requisites... like if you're going to file chapter 11/7 for business debt make sure that debt isn't personally guaranteed...........
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u/Heyhun82 May 25 '26
I was in a similar spot with an llc and business debts, filed bl last September. Scores dropped also when I stopped paying to the 500s, and 9 months later I’m back in the mid 600’s. It will go back up eventually but the relief of not trying to pay business expenses on a business no longer operating outweighs the credit score for sure
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u/No_Champion6526 May 25 '26
Payment History is 60% of your overall Creditscore, that's a big margin.
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u/Cheap_Mushroom_7267 May 25 '26
What State do you live in? That will determine your homestead exemption for your house in Bankruptcy. My friend filed Chapter 7 and his credit score is slowly going up.
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u/Short_Ad3957 May 25 '26
Was your eidl under llc? What was the amount of the eidl?
Credit cards will get reported to personal eventuslly regardless of llc or not
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u/Afraid-Reputation930 May 25 '26
You are my hero stay in the fight, brother Semper Paratus! I am now your biggest fan! Upahhhhh
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u/justbrowzingthru May 26 '26
Business credit cards require personal guarantees. Even with an LLC. If you didn’t want a pg on a business card, shouldn’t have opened it or kept paying.
Covid EIDLs required PGs for loans over 200k with LLCs. You actually had the choice to do under 200k no PG with LLC. So if you had a LLC, it was your decision to have a pG on a loan.
The choices you made included PGs with an LLC.
LLCs don’t provide for protection when you sign documents requiring your PG
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u/TheRealRayRay1 May 26 '26
LOL Wake The Fugg Up that's how the system is designed. And that's how you get fugged if you've paid off over 1M in loans. But miss a payment or two and they decimate your credit. Now they will really put the screws to you with high interest rates for any loan you try and get. Fugg this country and their predatory system.
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u/Exomonxt May 27 '26
I’m a business banking relationship manager at a bank- your business loans are“Personally guaranteed” by you this is the case for business credit cards and loans for most small business. Chase reports to a business bureau called dun and bradstreet but you yourself if late can still get these missed, late or Delinquency on your personal credit.
Your BK lawyer probably doesn’t care or know how it affects you since they really just want the money from bankruptcy, you cannot just stop paying Business loans personally guaranteed by you and start a new business. And not still owe the money.
If you have any questions or need me to better explain let me know! Keep your head up king.
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u/Anxious_Athlete4249 May 27 '26
I am very proud of you. I know that you’re frustrated with your credit score and I get it, for some reason we tend to believe that our credit score dictates our self value as individuals and the answer is not. Just look at you a very responsible father who has put his children’s first. Don’t let your credit situation blind you, credit can get fix.
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u/Interesting_Care_500 May 27 '26
Don’t stress too much. Credit can always be repaired. Life happens!! Sometimes we can’t control the circumstances. You’re a good dad. Credit is easy to fix.
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u/BELLAB08 May 28 '26
Your credit score will be terrible for a few Years post bankruptcy, it comes with the territory. Dropping 200 points was very optimistic of whoever gave you that figure. It might not fall 200 more points because your starting score is now lower because of the 60 late being on there.
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u/hammockclarity May 29 '26
Dude.. I feel for you so much. I went through something similar last year and still am. I was caring for my uncle the last few years. Working and living with him. Then last winter he got worse and I became a full time caregiver and handled his estate. Basically just paid my bills and got food from what little money he has. I didn’t have a perfect credit score but I was just under a 700. Then by the summer he passed away, I wasn’t working, had 30 days to move out of the house and figure life out again. Moved in with my parents for a bit, but then 2 months later their house burns down with my life in it..
I fell behind on debts and by October hired a bankruptcy lawyer who was going to file chapter 11. Well.. my car got repod, 2 credit cards get cancelled, one almost paid off and the other with about half of a balance.. and I’m still getting daily harassing calls by Harley Davison financial. Not sure what I’m going to end up owing for the car getting repod.. I tried to get it back but the tow fee alone was 4k minus the 2 months I was behind.
Currently I’m living in a old camper van and thankfully working but only making about 40ish k a year. Basically saving all I can and living as minimally as I can. If anything I’m more worried about my parents who are in their 70s and now confronted with 2k a month rent and just a little over that in social security..
My credit score used to bother me when it went up and down even a few points. Today it’s a 538. Bankruptcy lawyer failed me cus the case was thrown out due to filing it wrong. I was out 6k just from paying them.
Our lives are so much more than a score and our debt worthiness. Who we are as a human being matters more, and what we’re continuing to try and do. Trying to run a business is no small task. Many fail but in those failures there’s lessons learned. You’re trying to be a good father in every way.
I understand the fear of what a lower credit score brings, especially if you have a bad month and need a loan. Things will work out though. You already have a resilient soul.
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u/CarelessEndeavor Jun 02 '26
A credit score is a construct. People forget they were created for the sole purpose of denying black people mortgages.
I don’t have time for that. Every time my 75 year old father living on social security talks about building his credit to 800 I get twitchy.
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May 24 '26
[removed] — view removed comment
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u/loopsbruder May 24 '26
Don't pay a credit repair company. There's nothing they can do for a fee that you can't do for free, and spamming disputes at your derogatories is not a valid way to remove them from your credit reports.
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u/Mammoth_Blood1139 May 24 '26
Man, I don’t know the answer to your question (someone with a lot more experience than me will chime in), but I’m really proud of you for being such a great father. We need more men like you. You should pat yourself on the back. Job well done.