How Soon Will My Credit Score Improve After Bankruptcy?

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Dear Experian,

I recently had a bankruptcy removed from my credit report, but it didn't change my score. When or how do you update the credit score?


Dear PLM,

Your credit scores may improve when your bankruptcy is removed from your credit report, but you'll need to request a new credit score after its removal in order to see any impact.

Credit scores are not included in credit reports. Rather, scores reflect what is in your credit report at the time the score is calculated. So, credit scores are not continually updated as changes are made to your credit report, but instead are calculated at the moment that you or another authorized party requests it.

Whether your credit scores increase and by how much depends on the other information in your credit report, as well as the credit scoring model being used to calculate your score. For example, if you have other severe negative items in your credit history, you may not see an increase even after the bankruptcy is removed.

What Happens to Your Credit When You File for Bankruptcy?

How long your bankruptcy stays on your credit report depends on the type of bankruptcy you file. The two most common types of consumer bankruptcy are Chapter 7 and Chapter 13. In a Chapter 7 bankruptcy, you do not repay any of the debt owed. This type of bankruptcy listing remains on the credit report for 10 years from the date it is filed. Under Chapter 13 bankruptcy, you are responsible for paying back a portion of the debts that you owe through a debt repayment plan. A Chapter 13 bankruptcy is removed from your report seven years from the date it is filed.

Having a bankruptcy in your credit history will seriously affect your ability to obtain credit for as long as it remains on your report. If you do qualify for credit while the bankruptcy is part of your credit history, you will likely have to pay higher interest and fees than you would otherwise. It can also affect your ability to qualify for things like an apartment, utilities and even employment. Even insurance rates may be affected.

How to Build Back Your Credit After Bankruptcy

Rebuilding your credit after filing for bankruptcy can seem daunting, but there are some steps you can take to help your credit history begin to recover:

  • Make sure all payments are on time going forward. Sometimes, the bankruptcy court will allow you to keep certain accounts open. If you still have open and active accounts that were not included in bankruptcy, be sure to make every payment on time.
  • Open a new account. If you are starting from scratch with no remaining open accounts, it can be difficult to qualify for new credit after bankruptcy. Consider opening a secured credit card, getting a credit-builder loan, or asking a friend or family member to add you as an authorized user on their credit card. Making small purchases and then paying the balance in full each month will help build a positive payment history, which in time can help offset the negative impact of the bankruptcy.
  • Check your credit report frequently. Stay on top of your credit situation by reviewing your credit report often. You can also request your free credit score from Experian, which will include a list of the top risk factors impacting your scores.
  • Sign up for Experian Boost®ø. Adding your on-time cellphone, utility and streaming service payments with Experian Boost can help you increase your credit score so you can start to rebuild after bankruptcy.

How to Avoid Bankruptcy

Bankruptcy is the greatest indicator of risk in a credit report, so it has the most serious and longest-lasting impact on your ability to obtain new credit. For this reason, it should always be a last resort.

There are several alternatives to explore before considering bankruptcy:

  • Speak to a reputable financial advisor or credit counselor. A qualified expert will be able to provide an unbiased perspective that can help you through your decision-making process. They can even put you on a debt management plan, which can help you negotiate lower payments and more. With help from a counselor, and through careful budgeting, you may be able to repay the debts you owe over time.
  • Consolidate your debt. With debt consolidation, you'll roll all your debts into one new account, preferably with a lower interest rate. This can enable you to pay off your past-due amounts and make one monthly payment going forward. Having just one payment may make it easier to manage your existing debt, and could save you on interest as well.
  • Try to settle your debt. Debt settlement requires negotiating with your creditors to accept a smaller payment, reduce your interest rate or both in order to settle the debt. Debt settlement is considered negative because it means that you did not repay your debts as agreed. However, the credit impact from settling an account will probably not be as great or as long-lasting as default or declaring another bankruptcy.
  • Borrow money from family. If you are lucky enough to have a family member who is willing and able, you may be able to avoid bankruptcy by borrowing just enough to make your debt payments manageable again. Be sure to have a plan to pay your family member back, or else you may compromise your relationship with them.
  • Restructure your mortgage. With both of the following options, be aware that failure to make mortgage payments may result in your home being foreclosed on.
    • Mortgage refinance: If your credit is good enough, refinancing your mortgage to a new low rate could get your monthly payment low enough that it saves you from bankruptcy.
    • Mortgage modification: If you are unable to refinance at a lower rate, you may be able to qualify for a mortgage modification, which could also lower your payments.
  • Talk to your lender about a hardship program. If your financial situation is the result of the COVID-19 pandemic, your lenders may have payment accommodation plans available to assist you through this tough time.

Filing for bankruptcy is a major decision, and one you will live with for years to come, so don't be afraid to ask for help when determining whether this is the best option for you.

Thanks for asking.
Jennifer White, Consumer Education Specialist