A person’s credit score can be a good indicator of their overall financial situation. Making too many late payments and defaulting on too many lines of credit will eventually result in a poor credit score. This becomes a cycle because a person with a poor credit score won’t have as many financial opportunities, making it harder to rebuild credit. If they are approved for a line of credit, it may come with higher interest and other unfavorable terms to safeguard the lender against their negative credit history. When the pressure comes to a boiling point, many people in this type of situation will turn to bankruptcy. Chapter 7 bankruptcy and chapter 13 bankruptcy can provide much-needed debt relief to households with unmanageable debts. If you believe you could benefit from our assistance in seeking debt relief through bankruptcy in Arizona, call 602-649-4949 for your free phone consultation with Atlas Bankruptcy Lawyers today.
Arizona’s FICO Ranking
Across the United States, the average FICO credit score in 2025 was 714, which was a decrease of 1 point compared to the previous year. Experts attribute this decrease to some policies enacted by the second Trump administration. The return of student loan payments also meant the return of some borrowers defaulting on those payments. Some credit reporting restrictions have also been lowered. Arizona’s average FICO score is 711, which is slightly below the national average of 714. This falls within the “Good” range of scores between 670 and 739. Only Minnesota and Vermont peek into the “Very Good” range with average scores of 742 and 740, respectively. However, no state’s average scores fall below the “Good” range. Mississippi has the lowest average FICO score in the country at 676, followed by Louisiana at 686.
What Happens to a Credit Score Upon Filing for Bankruptcy?
Many of our clients come to us with concerns about the immediate effects that filing for bankruptcy will have on their credit. The assumption is that it will cause their score to decrease, but the answer actually depends on their unique circumstances. If the debtor already has a low credit score, filing for bankruptcy presents less of a risk. It might even cause their score to increase. Bankruptcy can clear accounts in which they are in default, which can actually help improve credit. The effect here will be more pronounced if the debtor has more accounts in default than current accounts. But if the debtor has done a good job of maintaining a healthy credit score despite ongoing financial issues, filing for bankruptcy is more likely to cause their credit score to decrease. If they’re somewhere in the middle, their score may remain approximately the same.
Improving Credit After Bankruptcy Discharge
Regardless of what happens to your credit score immediately after filing for bankruptcy, it’s probably important to you to rebuild your credit after your case has been discharged. There are some tried-and-true methods that bankruptcy debtors use after discharge to bring their credit score back to the level it was at before filing, or even higher, such as:
- Obtaining a secured credit card: Debtors lose access to all of their credit cards upon filing for bankruptcy, and must apply for new ones after discharge if they want them. But a post-bankruptcy debtor may also consider a secured credit card as a safer way to rebuild credit. A secured credit card is essentially a prepaid credit card, and they are offered by most banks and financial institutions. Using a secured credit card, the debtor can be sure they will never spend more than they can afford and get caught back in the cycle of credit card debt.
- Being highly cautious with traditional credit cards: A secured credit card may be the safe option, but there are plenty of benefits to using traditional credit cards. Having a high available revolving balance can improve credit, and spenders can accrue points that can be used for cash back, travel, investments, and more. But credit cards are a major cause behind many bankruptcy filings. And someone who was recently discharged from bankruptcy might not receive the best offers for new credit cards (but their mailbox will surely be flooded with offers shortly after their case is completed). A person in this situation should comb through these offers’ terms with a fine-toothed comb. Watch out for features like sign-up fees, annual fees, and high interest rates.
- Switching out secured assets: Bankruptcy gives debtors the chance to surrender secured assets without the typical financial penalties associated with abandoning a loan. This is also beneficial because secured creditors on loans retained through bankruptcy aren’t required to continue credit reporting on discharge- however, they surely will do so when the borrower is late on a payment. So keeping the same asset, which may have depreciated in value and need significant maintenance and repairs, may only stand to hurt the post-bankruptcy debtor’s credit score. The most common example of this type of strategy is switching out a vehicle with a balance remaining on the loan.
- Being added as an authorized user on someone else’s account: It’s possible for a person to gain credit-building benefits from a credit card without spending their own money. However, it does require cooperation from a reliable and trusted friend or family member. Someone who is added as an authorized user to another person’s credit card account will experience a credit boost if the primary user consistently makes their payments on time. At the same time, they could also see a reduction in their score if the primary user begins accruing their own credit card debt. The authorized user can have access to a credit card to actually spend on the account, but it can be easier to convince someone to add you as an authorized user if you agree not to have a card with which to spend.
- Using a credit builder loan: Low risk credit building strategies are key for debtors who have recently been discharged from bankruptcy. This loan is closer to a savings account, as the user makes monthly payments for a set period of time. After this date has passed, they will have access to the amount in the savings account. However, these payments are credit reported, helping improve post-bankruptcy credit health.
Does Checking Your Credit Score Have You Considering Bankruptcy? Schedule Your Free Phone Consultation Today.
A low credit score can be an indicator that it’s time for someone to consider the possibility of chapter 7 or chapter 13 bankruptcy. A bankruptcy declaration could be just the first stepping stone in a journey towards good financial health, including an improved credit score. But when filed without a knowledgeable professional, a debtor is at risk of obstacles like adversary proceedings, debts being excluded from discharge, and more. The best way to set yourself up for success in bankruptcy is by retaining experienced legal counsel for your case. Learn more about your options at no risk or cost to you, and see if you qualify to file with our firm for Zero Dollars Down. Schedule your free consultation with a team member from Atlas Bankruptcy Lawyers today at 602-649-4949 for more.
