How Bankruptcy Helps Your Credit Score

Posted by Wesley Scott on November 5, 2019 at 1:41 PM
Wesley Scott

What our guests want to know is how is bankruptcy A) going to look at my credit report and B) what is bankruptcy bankruptcy discharge and debt repaymentgoing to do to my credit score? These are common and worrying questions for our guests. Often times this can be the barrier that holds debtor’s back from seeking relief. Don’t let it!

Your credit score is an important part of your financial life –there’s no doubt about that. And bankruptcy does appear as a negative even in regard to your credit but our clients’ credit scores actually increase after receiving a discharge from bankruptcy. How does that work?!

Credit is built up of a bunch of different things. Do you have a variety of types of credit (i.e. retail accounts, credit cards, loans from different companies for different things)? If so, your credit score is going to be higher than if not. How long have you had various lines of credit open? The longer you have had a credit card or the longer you have a loan open –the better your credit score. And a big one: what does your payment history look like? Consistent and timely? Or spotty and late?

All of these factors and more affect your credit score and show up on your credit report. Now imagine all of these individual bits and pieces as negative marks on your credit report. Bankruptcy takes the place of all of those black marks. And, while a bankruptcy itself is considered a “black mark” as well, it is only a single mark as opposed to many. Also, bankruptcy discharges your debts. Once your debts are discharged in a bankruptcy that ratio is going to take a huge leap in the positive. 

If you have reservations about filing for bankruptcy because you are worried about credit, worry no more!


Get on the road to getting your life back! Request a free, no-obligation consultation with Kain & Scott at We are MN’s MOST experienced bankruptcy law firm!


Topics: Credit Counseling, Bankruptcy Lawyers MN