Do you know how your credit score is calculated? The answer may surprise you. The formula for a FICO score takes into account a number of factors.

  • 35% of the score is based on your payment history
  • 30% is based on how much debt you have.
  • 15% is the length of time you’re in debt.
  • 10% is recent debt.
  • 10% is the type of debt you incur.

Frequently, people ask us how long a credit score takes to recover from a bankruptcy. The answer is different in every case. Generally, most credit scores will go up substantially within a year of filing bankruptcy, simply because a lot of negative reporting drops off your credit, and you generally begin to open up new credit and have positive payment history.

The important thing to remember about a credit score is that it is a measure of risk. It is a number that tells a lender how likely you are to repay debts. It does not show how much you can reasonably borrow, and it does not measure wealth. It does not take into account how much money you make or what kind of assets you have. Always remember that credit is not a substitute for cash. While a good credit score is useful, it is not a substitute for money in the bank.