Does Bankruptcy Affect Your Credit Score in Australia?

Quick Answer: Yes. Bankruptcy has a severe and long-lasting impact on your Australian credit score. A bankruptcy listing stays on your credit file for 5 years from the date of discharge, or 7 years from the date the bankruptcy order was made — whichever is longer. During this period, most mainstream lenders will decline any application. After discharge, rebuilding is possible through consistent positive credit behaviour, and the credit file gradually recovers — typically reaching the Good range within 2–4 years of active rebuilding post-discharge.

Bankruptcy is a serious step — one taken when debt becomes truly unmanageable. If you're considering it, or have already gone through it, understanding the credit implications is essential for planning what comes next.

The honest answer: yes, bankruptcy affects your credit score significantly and for a long time. But it's not the end of your financial life. People rebuild after bankruptcy every year. The path is clear; it just requires patience and a disciplined approach.

How Bankruptcy Appears on Your Credit File

When you're declared bankrupt, three things happen to your credit file:

1. A bankruptcy listing is added — showing the date of the order, the date of discharge (once it occurs), and the administering trustee's details
2. All existing defaults and court judgements relating to discharged debts remain on your file for their original periods
3. Your credit score drops severely — into the Below Average band for most people, making mainstream lending effectively unavailable for the duration

The standard bankruptcy period in Australia is 3 years from filing, after which you're typically discharged. If your bankruptcy is filed and you're discharged after 3 years, the listing stays on your file for 5 years from discharge — meaning it could be visible for up to 8 years from your original filing date.

What You Can and Cannot Do With Credit While Bankrupt

During the period of bankruptcy, you are prohibited from obtaining credit of $6,394 or more (indexed figure as of 2025) without disclosing your bankruptcy to the lender. Failing to disclose is an offence under the Bankruptcy Act 1966.

Real Case Study: Kevin, Adelaide — Discharged 3 Years. Score 441 to 638 in 14 Months.

Kevin, 54, a former retail manager from Adelaide, was declared bankrupt in 2021 following the collapse of a small business he'd run for eight years. He was discharged in 2024. His Equifax score after discharge was 441 — Below Average, with a bankruptcy listing active and three defaults from the bankruptcy period still showing.

Kevin contacted ACS for a post-discharge assessment. We reviewed his file and found one of the three defaults had been listed two years before the bankruptcy, by a supplier who had failed to issue the required Section 21D pre-listing notice under the Privacy Act 1988 and Credit Reporting Code. That entry, while now subsumed within a broader bankruptcy picture, was independently challengeable.

We challenged it. It was removed in 44 days.

Kevin then followed a disciplined rebuilding program: a secured credit card with a a small secured limit limit, every bill on autopay, no new credit applications for 12 months. His Equifax score moved steadily.

Result: Fourteen months after discharge, Kevin's Equifax score had moved from 441 to 638 — reaching the Average band and approaching Good. He was then approved for a small personal loan through a credit union at 14.9% p.a. The bankruptcy listing remains on his file until 2029, but its impact is being progressively offset by a growing track record of positive credit behaviour. The unlawful default removal gave him a 60-point head start. Subject to individual assessment; results may vary.

How to Rebuild Your Credit Score After Bankruptcy

Rebuilding after bankruptcy follows the same principles as any credit repair — but requires extra patience because the bankruptcy listing is a hard ceiling on what mainstream lenders will offer until it expires.

1. Get a secured credit card — some credit unions and smaller banks offer secured cards where you deposit cash as security. Use it for small purchases and pay it in full every month. This builds positive CCR data immediately.
2. Put every bill on direct debit — utilities, phone, subscriptions. Under CCR, consistent on-time payment is now actively reported as positive data.
3. Do not apply for any new credit for 12 months — each rejection adds an enquiry. Let your positive payment history build first.
4. Check for removable entries — even with a bankruptcy listing, any defaults that were listed unlawfully under the Privacy Act 1988 can still be challenged and removed. Each removal gives your score a boost.
5. Keep utilisation low — when you do have credit again, never exceed 30% of the available limit
6. Be patient with the timeline — most people who follow this approach consistently reach the Average band within 12–18 months and Good within 3–4 years post-discharge

Frequently Asked Questions

How long does bankruptcy affect your credit score in Australia? A bankruptcy listing stays on your Australian credit file for 5 years from the date of discharge, or 7 years from the date the bankruptcy order was made — whichever is longer. If you're discharged after 3 years, the listing can remain for up to 8 years from original filing. During this period, most mainstream lenders will decline applications.

Can I get a loan while bankrupt in Australia? You can obtain credit during bankruptcy, but you must disclose your bankrupt status to any lender for debts of $6,394 or more. Most mainstream lenders will decline. Some specialist lenders and credit unions may offer limited products. Basic bank accounts and prepaid products are generally accessible without disclosure requirements.

Does bankruptcy affect my partner's credit score? No — your bankruptcy only affects your own credit file. Your partner's credit file is separate and not impacted by your bankruptcy unless they are co-borrowers or guarantors on accounts that become part of the bankruptcy estate. Joint accounts may be affected in terms of the joint debt, but the bankruptcy listing appears only on your individual file.

Can I get a home loan after bankruptcy in Australia? Not easily — and not while the bankruptcy listing is active with most mainstream lenders. Some specialist lenders will consider home loan applications after discharge (typically 12–24 months post-discharge), with significant deposit requirements and higher rates. Mainstream lending becomes more accessible as the bankruptcy listing ages and positive credit history builds. Many ACS clients reach a Good credit score 3–4 years after discharge and successfully apply for mainstream products.

Does a Part IX Debt Agreement affect your credit score the same as bankruptcy? A Part IX Debt Agreement is a less severe form of insolvency than full bankruptcy, but it still has significant credit file impact. The listing remains for 5 years from the end of the agreement. Like bankruptcy, most mainstream lenders will decline applications while the listing is active. The key difference is that a Part IX does not carry the same legal restrictions during the agreement period as formal bankruptcy.

How do I rebuild credit after bankruptcy in Australia? Start with a secured credit card or small secured loan, keep every payment on direct debit, avoid new credit applications for at least 12 months, and review your file for any unlawfully listed defaults that can be removed under the Privacy Act 1988. Consistent positive behaviour under CCR builds your score month by month. Most people reach the Average band within 12–18 months of following this approach post-discharge. Visit moneysmart.gov.au for additional guidance on insolvency options.

Already Discharged? Find Out What Can Be Fixed Now.

Even with a bankruptcy listing on your file, unlawfully listed defaults can be removed — giving your score a meaningful head start on rebuilding. A free assessment from ACS tells you exactly what's fixable.

Australian Credit Solutions is ASIC-licensed (ACL 532003), lawyer-led by Principal Solicitor Elisa Rothschild, and has helped over 5,000 Australians rebuild their financial lives since 2014. No Win No Fee. 98% success rate on accepted cases.

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Australian Credit Solutions Pty Ltd holds Australian Credit Licence ACL 532003. Credit repair services are subject to individual assessment. Results may vary. This article provides general information only and does not constitute legal or financial advice.

Related reading: Rebuilding Credit After a Default → | Improve Your Credit Score → | MoneySmart Bankruptcy Guide →