You’ve been struggling with money, and you know that something has to give. You’re living paycheck to paycheck, barely making ends meet. Sometimes, you can’t.

One thing you’ve been worried about is your credit score. You know that a bad credit score hurts your chances of getting credit, loans or mortgages in the future. Remember, though, your financial security is more important. Here’s what you need to know about how your credit score is affected by bankruptcy.

What are credit scores?

A credit score is a score between 300 and 850 that shows how financially responsible you are with different forms of credit. It is calculated based on how much debt you have, how much open credit you have and how often you make payments on time.

How does debt impact a credit score?

Debt isn’t always bad for your credit score. If you have debt but pay on that debt on time each month, you’ll likely see your credit score improve. On the other hand, if you have debts you can’t make payments on time for, then you could see your credit score drop. If you’ve had credit for a long time, like five or more years, it will benefit you more than if the account has been open for one year. Long-term stability looks good to lenders and helps increase your credit score.

What happens if you file for bankruptcy?

If you file for bankruptcy, your credit score will decrease significantly. It is known to drop credit scores by around 130 to 200 points, depending on how good your score is to begin with. A good credit score takes a harder hit than a bad score.

Keep in mind that, in most cases, you’re considering bankruptcy because you can’t keep up with payments or are in default already. That means it’s likely your credit score has already dropped and may not be as badly affected by bankruptcy.

How long does it take for credit scores to recover?

It depends on your individual history, but you may see your credit score begin to increase just a few months after you go through bankruptcy. It’s estimated that it takes around five years to completely recover, but that’s an average. Some people recover much faster thanks to good financial practices.

Bankruptcy isn’t all bad. It helps you resolve problems in your life that make it hard to make ends meet. Think of it like a chance to start over. Even if it takes time, you can build yourself up financially and have better security in the future.