How Will Bankruptcy Affect My Credit Score?

Filing for bankruptcy does not always have a severely negative impact on a debtor’s credit score. Bankruptcy always shows up on a credit report, but how big of an effect it has depends on the debtor’s specific circumstances. Those with relatively good credit will realize a significant drop in their score, while those with poor credit may only notice a small drop in their score. Similarly, those with numerous credit accounts will realize a more significant drop in their score than those with fewer credit accounts.

Can I Improve My Credit Score Through Bankruptcy?

Most people who are seriously considering bankruptcy do not have a great credit score to begin with. It is possible for such individuals to raise their scores by filing for bankruptcy. Filing for bankruptcy removes most blemishes resulting from outstanding debt and late payments from your credit score. While these accounts will instead be marked as included in the bankruptcy, it could nevertheless improve a very low credit score.


Even if filing for bankruptcy does not immediately improve your credit score it could help you to improve your score over the next couple of years.  Your credit score is determined by comparing your credit activity with that of individuals who are situated similarly. So if you exercise caution and retain good credit standing compared to others who have filed for bankruptcy it is possible to dramatically improve your credit score over time. In many instances it is easier to improve your score after filing for bankruptcy than by trying to climb out of debt without filing.