How long does it take to restore credit?

Many people often fear that filing bankruptcy will ruin their credit forever. The truth is, bankruptcy is just one part of your financial strength. I often say that restoring your credit is similar to losing weight and working out. The harder you want to work at it, the more results you will see.


In order to restore your credit, you need to begin working it out and strengthening it. If you are preparing to file for bankruptcy, your attorney (or you) should obtain a copy of your credit report. In addition to listing all of your creditors, your credit report should list your current credit score. Many credit reports also provide a notification of what your credit score will be post-bankruptcy.


Your credit score is made up of many factors. These factors include:

  • Your debt-to-income ratio
  • Whether you pay more than the minimum balance on your debts
  • Whether you pay your bills on time
  • The different kind of debts you have
  • How long you have had your credit cards
  • How often your credit report is run (for an apartment, a loan, a new credit card or job)


Take these steps to ensure that you are increasing your credit score:


  1. Know what your credit score is right now. Obtain your free credit score by getting your free credit report from, or from a reputable app (such as Credit Sesame), or from a credit card statement that provides your credit score (such as Discover Card).


  1. Understand what your credit report says and what your credit score means.
    1. Payment history – includes such as your history of making your credit payments on time and would include your history if you had a bankruptcy or if you settled or negotiated a debt for less than the full amount of the debt.
    2. Credit utilization/usage – includes how much debt you have in relation to your credit card limit. If you have a credit card with a $5,000 limit, you will have a higher credit score if you have a balance of less than $500 on the card.
    3. Credit history – includes how long you have had credit cards. If you close your older credit cards, it can actually negatively impact your credit score. You want to show that you can keep your finances stable over the course of time. If you file for bankruptcy, your credit history will reset to 0 and you will begin re-establishing your credit history. It takes an average of 5 years to achieve an “excellent” credit history.
    4. Account mix/variety – includes having different types of credit. Different types include a car loan, a mortgage, bank credit cards, and store credit cards. If you can manage different types of credit, you show better financial stability.
    5. Credit inquiries – includes how often people run your credit report. If you are attempting to get approved for a loan or a credit card, try to keep your credit inquires between 1 and 2 per calendar month. If you are looking for a job and running your credit report is part of your background check, try to keep the inquiries to no more than 2 per month. Also, this is the factor that is the least troublesome. If you have more than 3 inquires in one month, it may affect your credit negatively now; having more credit, a new type of credit, or a new job with more income will only positively impact your credit later.


  1. Review your credit report to see if you have any errors on your credit report. Look at all of the creditors listed. Sometimes store cards are listed under the bank that holds them, so if you have a Lowes card, a J.C. Penney card, or any furniture store credit card, expect to see the Synchrony Bank name.  On your credit report, there should be a listing of which credit bureau is reporting the credit card and balance. There are 3 credit bureaus: Experian, Transunion, and Equifax. For each error, contact EACH credit bureau that it is reporting that balance. If you have a creditor that has more than one account and there are multiple errors, dispute EACH error for each account separately.


  1. Set a realistic goal for increasing your credit score. I work hard on my credit score and having excellent credit is important to me. This would be similar to someone who goes to the gym 6 days a week. I was able to increase my credit score 50 points within one month. A realistic goal for what someone looking to improve their credit score by 50 points would be to complete that in 3 months.


  1. Set a plan as to how you will increase your credit score.


  • A secured credit card is an excellent option to begin improving your credit score. You can usually get a secured credit card from the bank where your checking account is. You can usually get a secured credit card in limits from $500.00 to $2,500.00. What you do is you pay upfront for the amount of credit you would like. If you would like a secured credit card with a $1,000 limit, you would pay the bank $1,000.00 for your secured credit card. You use the secured credit card like you would use any other credit card. You use it to make purchases and then you want to pay off the balance in full each month. The bank protects itself from your less-than-perfect credit by holding your pre-paid $1,000. If you do not pay your credit card bill, the bank already has their money. If you make your payments, they report the positive marks on your credit score. It is a win-win situation.
  • Pay down your credit cards. I subscribe to the concept of paying off the credit cards with the highest interest rate first. If your cards are:
    • Macy’s – $1,500 balance and 22% interest rate; $89 minimum payment
    • Citibank- $22,000 balance and 8% interest rate; $243 minimum payment
    • Rooms to Go – $10,000 balance and 20% interest rate; $112 minimum payment
    • Discover – $6,000 balance and 14% interest rate; $98 minimum payment


Start by paying off the Macy’s card, then the Rooms to Go card, then the Discover card, and then the Citibank card. The way to decide how much you can pay towards each card is to decide how fast you want to pay these cards off. If you want to pay these cards off in 3 years, you will need to pay at least $1,000 per month toward your cards. You will pay the minimum balance on every card except Macy’s ($453). Macy’s gets whatever is left over ($547). Continue this payment structure until Macy’s is paid off. Then, start focusing on the  Rooms to Go card. You would pay the minimum balances on Citibank and Discover ($341) and put the rest towards Rooms to Go ($659).


  • Do not close your old credit cards. Keeping your older credit cards open will improve your credit score because it will improve your credit history rating.


  1. Get copies of your credit report every year. Make sure you are checking for errors every year.


  1. Make smart and wise credit choices.
  • Pay your credit card balance in full each month.
  • Pay your bill early or on time each month.
  • Keep your credit card balances under 10%.


  1. Check your progress periodically. Make sure to stay on track. Avoid using impulse purchases to reward yourself!

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