Understanding Your Credit Score (After Debt or Bankruptcy)

If you’ve faced financial stress, dealt with debt, or filed for bankruptcy, you’ve probably heard a lot about credit scores. And that three-digit number can feel confusing, frustrating, or even like a judgment. 

👉 But here’s the truth: Your credit score is just a snapshot of your recent credit history. It’s not a measure of your worth.

In this guide, you’ll learn what affects your credit score, how it works, and how you can start rebuilding it if you’ve had a few stumbles.

What Makes Up Your Credit Score (and What You Can Actually Control)

Most lenders use a scoring model called FICO to calculate your credit score. In this model, your credit score is impacted by five main factors:

• Payment history (35%): Are you making payments on time?

• Credit utilization (30%): How much of your available credit are you using?

• Length of credit history (15%): How long have your accounts been open?

• Credit mix (10%): Do you have a variety of credit types (like credit cards and installment loans)?

• New credit (10%): Have you recently opened new credit accounts?

How Your Payment History Impacts Your Credit Score

Your payment history is the single most important part of your credit score. It makes up about 35% of your FICO score. That means it carries more weight than any other factor. It’s also extremely influential in calculating your VantageScore, which is the second most commonly used scoring model.

💡 Your payment history is a record of whether you’ve paid your debts on time. This includes credit cards, car loans, personal loans, and mortgages. By default, it doesn’t include other common bills like your rent, utilities, cellphone bill, or medical bills. 

Because your payment history is such an important factor in determining your credit score, late or missing debt payments can seriously hurt your score. But life happens, and if you’ve missed payments, you’re not alone. 

📈 The good news is that you can always rebuild. Focusing on making on-time payments is a great place to start if you’re looking to boost your credit score. Over time, those positive marks can help push your score upward — even if you’ve had late payments, collections accounts, or bankruptcy in your past.

How Credit Utilization Affects Your Credit Score

Your credit use — how much of your available credit you’re using — makes up about 30% of your FICO score. This is often called your credit utilization rate, and keeping it low can help improve your score over time.

💡Credit utilization measures how much of your available credit you’re using. For example, if you have a credit card with a $1,000 limit and a $500 balance, your utilization is 50%. 

Most experts say keeping it under 30% is a good goal, but lower is even better. If you’re really working to rebuild your credit after bankruptcy or other financial hardship, aim to keep it under 10%.

✅ You don’t need to carry a balance to help your score. In fact, paying your full balance each month can show lenders that you use credit responsibly. If you're working to rebuild, one option is to start with a low-limit card and make small purchases you can easily pay off. Over time, keeping your balances low and making on-time payments can help your score steadily improve.

How Length of Credit History Impacts Your Credit Score

Length of credit history makes up about 15% of your FICO score. 

⚡The length of your credit history tells lenders how long your credit accounts have been open. It includes the age of your oldest account, your newest one, and the average across all accounts. 

Simply put: The longer your history, the more it can help your score — especially if that history shows responsible use.

💡 If you’re thinking about closing an old credit card, keep in mind it could shorten your credit history and raise your utilization rate.

If you're starting fresh after bankruptcy or rebuilding credit, you may not have much history yet, and that’s okay. Everyone starts somewhere. Over time, keeping accounts open (even ones you don’t use often) can help build up that average age. 

⚠️ Just be careful with new credit: Opening several accounts at once can shorten your average and may temporarily dip your score.

How Credit Mix Impacts Your Credit Score

Credit mix makes up about 10% of your FICO score. 

💡Credit mix refers to the different types of credit you use. 

There are two main types of credit: 

• Revolving credit, like credit cards or a line of credit

• Installment credit, like car loans, student loans, or mortgages 

👉 Revolving credit lets you borrow up to a limit and carry a balance, while installment credit is a fixed loan you repay in set amounts over time. Having a mix of both shows lenders you can handle different kinds of debt responsibly.

You don’t need to go out and open new accounts just to improve your credit mix. It’s more of a “nice-to-have” than a must-have. Many people start rebuilding with one type of credit, like a secured credit card or a credit-builder loan. Over time, as your financial situation improves, you may naturally add more variety without trying to force it.

How New Credit Impacts Your Credit Score

New credit makes up about 10% of your FICO score. 

💡New credit is a measure of how often you’ve applied for new credit recently. 

Each time you apply for a credit card or loan, the lender usually does a hard inquiry, which can cause a small, temporary dip in your score. A few inquiries aren’t a big deal, but several in a short period can signal risk to lenders.

If you’re rebuilding credit, it’s common to start with one new account, like a secured credit card or credit-builder loan. Just try not to open too many accounts at once. Giving each new account time to grow and making on-time payments can help strengthen your credit without adding too many inquiries at once.

What’s the Difference Between Hard and Soft Inquiries?

A hard inquiry happens when a lender checks your credit because you applied for new credit, like a loan or credit card. Hard inquiries can slightly lower your score for a short time. 

A soft inquiry happens when you check your own credit or a company does a background check. It doesn’t affect your score at all. Only you and the credit bureaus can see soft inquiries.

✅ Many different people or companies — like landlords, utility providers, or credit card issuers — might want to check your credit. If you’re not sure what kind of inquiry they’ll run, it’s perfectly okay to ask whether it’ll be a hard or soft pull.

How To Get Your Credit Report for Free

You can get a free credit report every week from each of the three major credit bureaus — Experian, Equifax, and TransUnion — by going to AnnualCreditReport.com. 

This is the only website authorized by the federal government to provide free credit reports. There’s no cost, and you don’t need to enter a credit card. You can check all three at once or space them out to stay informed year-round.

💡 Your credit report is a detailed record of your credit history, including loans, credit cards, and payment activity. It’s separate from your credit score, but the information in your report is what helps calculate that score. 

Think of it this way: Your credit report is like a transcript that shows your credit history in detail, and your credit score is like a grade that sums it all up at a glance.

Your credit report is one of the most important tools you have when it comes to understanding, and rebuilding, your financial health. That’s why it’s important to check your report regularly. Doing so can help you spot and report errors, monitor your debt accounts, and catch identity theft early.

📌 It’s most common to get your reports online, but you can request your reports by phone or mail, especially if you need alternative access due to a disability. You can call (877) 322-8228 or find instructions for mailing a request on the AnnualCreditReport website.

What To Look for On Your Credit Report

When you review your credit report, it helps to know what you’re looking at and why it matters. Here are the main things to check:

• Personal information: Verify that your name, address history, and Social Security number are correct.

• Credit accounts (tradelines): Make sure all loans and credit cards listed belong to you and that the balances and payment statuses look accurate.

• Account status: Look for any accounts that are listed as delinquent or in collections.

• Inquiries: These show who has checked your credit. Hard inquiries happen when you apply for credit; soft inquiries happen when you check your own report or get pre-approved offers.

• Public records: These might include bankruptcies, foreclosures, or tax liens.

🔎 If you spot something that doesn’t look right, you can file a dispute with the credit bureau that shows the error. They're required by law to investigate and remove or correct any inaccurate info. Having inaccurate information removed is a great way to boost your credit score.

How To Check Your Credit Score

A credit score is a three-digit number that estimates how likely you are to repay borrowed money, based on the information in your credit report. 

Your credit score isn’t included in your free credit report, but it’s still easy to check. Unlike your credit reports, accessing your credit score isn’t always free. That said, there are many free options.

For example, many banks and credit card companies now offer access to your score as part of your online account. You can also use free services like Credit Karma, Credit Sesame, or Experian to check your score.

Here are a few things to keep in mind when checking your credit score:

• You don’t have just one score. You may see slightly different scores depending on the scoring model (like FICO or VantageScore) and the credit bureau providing the data.

• Checking your score won’t hurt your score. This is a soft inquiry, so it doesn’t lower your score or show up to lenders.

• It can help you track progress. Watching your score over time can show how your habits — like paying bills on time or lowering balances — are starting to make a difference. But try not to obsess over small changes.

• Small changes are normal. Credit scores naturally go up and down a few points. Try not to stress about daily changes. What matters most is your overall progress over time.

How Credit Scores Are Calculated

Credit scoring companies like FICO and VantageScore use computer algorithms to analyze your credit report and compare your credit habits to patterns in millions of other people’s reports. Based on that comparison, the model predicts how likely you are to repay debt in the future. And it gives you a score to reflect that risk.

👉 To generate a score, you need to have at least one account open and active for a certain period. For FICO, that means having one account open for six months or more and at least one account reported to the credit bureau within the last six months. VantageScore may be able to generate a score with less credit history, but it still needs at least one active account on your report.

❌ Your credit score doesn’t include personal details like your income, age, race, address, or job title. It’s based only on your credit-related activity, such as what you’ve borrowed, how you’ve paid it back, and how recently you’ve used credit.

Lenders use your credit score to help determine whether to approve your application, how much to offer, and what interest rate to charge. This process is called credit determination. While your score is a big part of it, other factors, like your income, may also play a role.

What Your Credit Score Actually Means

In the FICO model, credit scores range from 300 to 850. 

Generally speaking, the lower your score, the harder it will be to get approved for credit and the higher your interest rates will be. The higher your score, the more likely you are to get approved for credit and the lower your interest rates will be.

Here’s a look at different credit score ranges, how lenders view them, and what you can do to get to the next level:

The Truth About Bankruptcy and Credit Scores

You’ve probably seen scary claims that filing for bankruptcy will destroy your credit score. The truth is, the impact depends a lot on your credit history before filing, and it’s often not as bad as people fear.

Here’s what we’ve seen after helping thousands of people file Chapter 7 bankruptcy for free:

• If your score is good or excellent before filing, you’re likely to see a bigger drop in your score after you file.

• If your score is already fair or poor, the drop tends to be smaller, and sometimes there’s little change at all.

• If you already have accounts in collections or default, those usually do more damage to your score than a bankruptcy would. In these cases, filing bankruptcy often helps people get a clean slate and a clear path to start rebuilding.

💡 While your credit score matters, so does your overall financial health. For many people, trying to protect a credit score while carrying unmanageable debt can feel like trying to patch a sinking boat. It’s okay to pause and ask: Is trying to preserve my score worth the cost of staying stuck in debt?

If you do decide to file bankruptcy and your credit score takes a hit, remember, it won’t last forever, and you can always rebuild.

How To Start Rebuilding Your Credit

If your credit score isn’t where you want it to be right now, you’re not alone. The good news is that credit scores are designed to change over time, and even negative items will eventually drop off your report.

Here are some simple steps you can take to start rebuilding your credit:

✅ Keep your credit card balances low.

✅ Use tools like secured credit cards or credit-builder loans or self-report your monthly bills.

✅ Dispute credit report errors.

✅ Write a goodwill letter to ask a lender to remove a past late payment from your report.

🔗 Want more detailed tips? Check out our guide on How To Improve Your Credit Score After Bankruptcy or Debt.

Frequently Asked Questions About Credit & Credit Scores

Credit scores can be confusing — especially after bankruptcy or financial hardship. Below are answers to common questions we hear from folks trying to understand what affects their score, how long negative items stick around, and what steps can help clean things up.

Can You Remove Things From Your Credit Report?

You generally can’t remove accurate negative information from your credit report. But if something is incorrect, outdated, or doesn’t belong to you, you have the right to dispute it and ask for it to be removed.

How Long Do Negative Items Stay on Your Credit Report?

Most negative items — such as a car repossession or collections account — drop off your credit report automatically after seven years. Chapter 7 bankruptcy is an exception: It generally stays on your credit report for 10 years.

You can write a credit dispute letter to request to have items removed from your credit report if there are inaccuracies in the account information.

How Long Does a Bankruptcy Stay on Your Credit Report?

Chapter 7 stays on your credit report for 10 years, while Chapter 13 stays on your report for seven years. But the negative impact on your score lessens over time.

And you don’t have to wait for the bankruptcy to fall off your credit report before you start rebuilding. Many people see improvements within a year through consistent, on-time payments and responsible credit use.

What’s Considered a Good Credit Score for Buying a Car?

Most lenders want to see a score of at least 670 to offer favorable auto loan terms. But it’s possible to finance a car with a lower score. You may just face higher interest rates or need a co-signer. Some dealerships work with scores in the 500s, though interest rates can be steep.

Some people choose to purchase a car with a higher interest rate and then refinance once they get their credit score up.

How Do Student Loans Affect Your Credit Score?

Student loans affect your credit score like any other loan. On-time payments can help your score, while missed payments or defaulting can hurt it. 

If your loans are in deferment or forbearance, they usually don’t count against you, but once they enter repayment, your history matters

Do You Need Good Credit To Get Student Loans?

Federal student loans don’t require a credit check for most borrowers. But private student loans usually do. With private student loans, the better your score, the lower your interest rate will be.

When Do Student Loans Fall Off Your Credit Report?

It depends on whether they’re in good standing or in default.

If you’ve defaulted on the loan, it will typically fall off your credit report seven years after the date of the first missed payment that led to default.

If your loans are in good standing, they’ll usually stay on your credit report for 10 years. This is good because it helps your credit history.

If you’ve had a student loan forgiven or discharged, it won’t disappear right away. It usually remains on your report (as a closed account) for up to 10 years, depending on the credit bureau’s policy.

⚠️ If your loan information is inaccurate or should no longer be there, you have the right to dispute it.

Why Is My Credit Score Still Low Even After I’ve Paid Off Debt?

Paying off debt helps, but credit scores also reflect positive activity over time — like on-time payments, low balances, and account age. Keep going. Progress is often gradual.