At a Glance

Bankruptcy is a challenging experience for anybody to go through and it can cause countless concerns to arise in your mind. One such concern is how this event will impact your credit score in the immediate future and far future. Understanding how to handle your credit score amidst bankruptcy can lessen the blow that may occur.

In this article, you’ll learn:

What is bankruptcy and how does it appear on your credit report?

For those unfamiliar with the term, bankruptcy is a legal process in which a person or persons acknowledges that they cannot repay their debts. It allows this individual or individuals to seek debt relief in a court of law. Based on the liquidation availability of the individual filing for bankruptcy, some level of repayment will still be given to the lender.

There are a few different types of bankruptcies that can be filed, but the overall point of each is to provide some level of financial relief to the person applying.

Filing for bankruptcy successfully will appear on your credit report as a general notice of what occurred, specifically in the public records portion of your report.

For how long does bankruptcy stay on your credit report?

The length of time in which bankruptcy stays on your credit report depends on the type of bankruptcy you file for:

  • Chapter 7 Bankruptcy – Up to 10 years from filing date
  • Chapter 11 Bankruptcy – Up to 10 years from filing date
  • Chapter 12 Bankruptcy – Up to 10 years from filing date
  • Chapter 13 Bankruptcy – Up to 7 years from filing date

This will also include any accounts associated with the bankruptcy.

How does bankruptcy affect your credit score?

Bankruptcy has a heavy impact on your credit score, as you may expect. On average, for credit scores above 780 (excellent), the impact will be a reduction of 240 points. For credit scores in the fair range (680 and below) the impact will be a reduction of 150 points. Your credit score after bankruptcy will certainly be far lower than before, but it can be raised over time with effort.

How can you rebuild your credit after bankruptcy?

As mentioned above, your after-bankruptcy credit score can be improved over time. There are some strategies you can use to go about this process.

1. Check your credit report

Examine your credit report to see where shortcomings in your credit score may exist. Smaller credit factors may be able to be addressed quickly, but more challenging factors can take longer to resolve. For example, a history of nonpayment on credit is harder to rectify but starting to make payments in full on time is an excellent start.

2. Monitor your credit scores regularly

By monitoring your credit score, you can further investigate which factors you should focus on to improve your score. Assuming you have multiple streams of credit, monitor each carefully to ensure you do not miss any credit payments. If you are spread too thin, consider debt consolidation.

3. Maintain responsible credit habits

Making payments on time and in full is the best credit habit to have when attempting to build up your credit score. Additionally, focus on not utilizing a large portion of your credit when you are just building your score back up. Take the time to start slowly on borrowing before increasing amounts.

4. Get a secured credit card

As opposed to an unsecured credit card, a secured card requires some form of collateral from the borrower. This is in the form of a cash deposit that you pay upfront which determines the amount you will be able to borrow on the card. In rare cases, a good credit score may allow the waiving of this deposit, but it is unlikely.

5. Credit-builder loans

Specialty loans exist that are designed to help you start to build your credit. With this type of loan, you request to borrow a sum of money and the funds approved are then held in a specialty bank account that you don’t have access to. Over time, you make payments on that sum to the lender, payments that are reported to the credit bureaus. Once you have made all payments, the entire sum of borrowed money is released to you.

6. Consider a co-signer

If your credit score is not strong enough, consider adding a co-signer to the loan who has a better credit score. Be aware that co-signers are responsible for the loan if you stop payments, meaning that their credit history and score is on the line as well.

7. Ask to become an authorized user

An excellent strategy for building your credit is to get added as an authorized user to a credit card. This means that you can use the credit card as if it’s your own, but you are not the owner of the account. However, successful payments by the card owner will also raise your own credit score. It’s worth noting that you don’t even need to use the card as an authorized user to reap the credit benefits of being on the account.

How long will it take to build credit after bankruptcy?

Building credit is a long and arduous process regardless of whether you have filed for bankruptcy. Knowing what bankruptcy does to your credit is one thing but understanding how long it takes to rectify it is another. In general, 18 to 24 months is the projected amount of time for a person with an established credit history to turn around their credit score after declaring bankruptcy.


A good credit score after bankruptcy is less about what your credit score is and more about how it falls. On average, those with an excellent credit score can expect a drop in their credit score of about 240 points, but those with fair credit scores and below can expect a 150-point drop.

The average credit score after bankruptcy chapter 7 or other types is 400-550, depending on where your credit score started. Expect a drop of anywhere between 150-240 points in your credit following a bankruptcy filing.

In general, recovering your credit score following bankruptcy will take around 18 to 24 months on average.

Bankruptcies cannot be removed from your credit report by yourself. After the period it takes for the bankruptcy to be allowed to be removed, it will be done automatically.