It’s true bankruptcy offers reprieve from financial burden. But the hit your credit score takes following Chapter 7 or Chapter 13 can be just as stressful. Do not despair; you can repair your damaged credit.

We’ve aimed the following steps at helping you create better spending habits and be mindful of your current debt. If you also stick to a timely payment schedule and verify the accuracy of your credit report, you’ll be on the right track to a better score.

Credit Factors

First, you should note what factors determine your credit score. In order of importance, these factors are:

• Payment history—how well you’ve handled your debt, or how often you make payments
• Percentage of credit used—how much debt your have versus how much credit is available
• Length of credit history—how long your accounts have been open and how long it’s been since you used them
• Types of credit used—what kind of loans you have, such as auto loans, student loans, or a home mortgage
• New credit—how many accounts you’ve opened in the past 6 to 12 months and the number of credit inquiries
• Once you understand where your credit score comes from, you can start to bring it up.

Step 1: Get a copy of your credit report and fix any errors

Did you know federal law authorizes you to receive one free credit report from all 3 bureaus—Equifax, Experian, and TransUnion—every 12 months? Get online and request copies of your report so you can review it in detail. You’d be surprised how often errors occur.

Check it for any inconsistencies. Make sure the reports do not list any debts that you’ve already paid. Analyze current balances and confirm the debts belong to you. If you find any errors, contact the reporting agency to file a dispute.

Step 2: Catch up on missed payments

It’s becoming quite common for businesses to send unpaid accounts to a collection agency. Any delinquencies sent to debt collectors show up on your credit report. Therefore, you need to get caught up on any past-due bills as quickly as possible.

Step 3: Pay everything on time

Some types of debt follow you through life. For example, bankruptcy typically doesn’t discharge student loans. But retaining these debts can work in your favor if you pay them on time.

A great way to pay your loans on time is to set up automatic payments. This system will withdraw payments directly from your bank account. You’ll never have to worry about missing or making a late payment again.

Payment history has a significant impact on your credit score. It shows lenders how likely you are to repay your loans and marks your reliability. Pay on time, and you appear as less of a risk to potential lenders.

Step 4: Apply for a credit card

It may seem counterintuitive to get a credit card fresh out of bankruptcy. But using your credit card wisely illustrates your stability as a borrower. You can do this by:

• Using up to only 30% of your total limit
• Paying off your balance in full every month
• Making more than the minimum monthly payment if you can’t pay the entire balance
• Only buying things you can afford

Avoid Subprime Lenders and Prepaid Cards

Many creditors offer low-limit credit cards, but be cautious. Beware of subprime lenders who prey on individuals with bad credit. These cards have high interest rates and loads of fees.

You may also be tempted to get a prepaid credit card. Don’t. Since anyone can get a prepaid credit card regardless of credit history, they’re usually accompanied by steep fees, too. Furthermore, these cards don’t report to credit bureaus, so they do nothing to boost your credit score.

Secured Credit Cards

Unaffordable credit will land you right back in the hole. Instead, opt for a secured credit card. Unfortunately, these cards still carry high interest rates. But they’re backed by a money deposit you make to a special savings account.

The amount of the deposit is usually equal to the credit limit. That way, if you ever miss a payment, the company will automatically deduct the amount from your account.

Be Patient and Diligent

Rebuilding your credit doesn’t happen overnight. It takes time to develop responsible spending habits. And some things—like fixing credit report errors—may just need additional time to process.

But sticking to a budget and staying conscientious of credit limits and payments will definitely lead you to your goal. Talk with your bankruptcy attorney for extra support and resources.