The fact is that if you take care to rehabilitate your credit, your credit score can easily go back to prime territory; over 680 and into the 700s within two years.
We use MyHorizons CreditXpert to get a precise prediction of where your credit score is likely to go one year after filing bankruptcy. It assumes you have no further derogatory remarks and a few positive remarks that you are paying well on new established credit. I do this in our first working appointment in most cases.
Often I see credit scores bumping up to almost 680 even if the credit score is currently in the 500s. A 150-point increase is not uncommon. It usually depends on the depth of your credit history whether your credit will bounce back soon. The recovery in the first year can be dramatic. It can put you at the border of prime territory. Then, in the 2nd year after you’ve filed bankruptcy, you can climb back into prime territory.
The reason for this is simple. Now you have no capacity to take on new debt because you’re overburdened (your utilization ratio is high in industry parlance). That is the biggest weight keeping down your credit score. Once the bankruptcy discharge lifts that weight off your finances you could, theoretically, take on more debt so you’ll have a higher credit score. Hopefully you will not succumb to that temptation unless it is for a very productive reason like buying an affordable house.
My own clients have borne out that the credit predictions are true. Most have good credit scores two years after filing if they manage their credit.