How Bankruptcy Affects Your Credit Score & How to Rebuild

Published on February 15, 2025 by Casey Yontz, Bankruptcy Attorney

Bankruptcy can have a significant impact on your credit score, but it doesn't mark the end of your financial future. In fact, filing for bankruptcy often provides a fresh start—a chance to rebuild your credit and regain control over your finances. This article explains how different types of bankruptcy affect your credit score and offers actionable tips for rebuilding your financial health.

Does Bankruptcy Ruin Your Credit Score?

While bankruptcy does affect your credit score, it isn't a permanent sentence. Many people mistakenly believe that bankruptcy will ruin their credit forever, but it actually offers an opportunity to start over. A bankruptcy filing will remain on your credit report for a set period:

Chapter 7 Bankruptcy – Stays on your credit report for 10 years.
Chapter 13 Bankruptcy – Remains for 7 years from the filing date.

How Much Does Bankruptcy Lower Your Credit Score?

The drop in your credit score depends largely on your starting point:

If you have excellent credit (typically 700+), the impact may be a drop of 100 to 200 points.
For those with lower credit scores (under 600), the change might be less dramatic.

Keep in mind that every financial situation is unique, and your score will gradually improve as you adopt responsible financial habits.

Can You Get Credit After Bankruptcy?

Absolutely. Many individuals successfully rebuild their credit after bankruptcy by following these best practices:

Proven Ways to Rebuild Credit

Apply for a secured credit card: This can help you rebuild credit while minimizing risk.
Make on-time payments: Consistency is key to improving your credit history.
Maintain low credit utilization: Aim for a usage rate below 30% of your available credit.
Monitor your credit report: Regular checks help ensure accuracy and identify potential issues early.
Consider a credit-builder loan: These loans are designed specifically to help improve credit scores.

Mistakes to Avoid

High-interest loans too soon: Avoid taking on debt with steep interest rates right after bankruptcy.
Missing bill payments: Timely payments are crucial for rebuilding trust with lenders.
Closing old accounts: Keeping older accounts open can benefit your credit history by increasing your average account age.

How Long Does It Take to Rebuild Credit?

Rebuilding your credit is a gradual process. With consistent, responsible financial behavior, many individuals start to see significant improvements within 12 to 24 months. The key is to remain patient and focused on long-term financial goals.

Get a Free Bankruptcy Consultation

If you're concerned about bankruptcy and its impact on your credit score, an experienced bankruptcy attorney can provide personalized guidance to help you navigate your options and rebuild your financial future.

Schedule Your Free Consultation

Complete the form below to speak with an experienced bankruptcy attorney.

Service Areas

← Back to Blog