Filing for bankruptcy is often a difficult choice, as the legal proceedings can leave your credit in a challenged state. Fortunately, damage done by filing for bankruptcy does not last longer than ten years, and sometimes it can be over in a little less than seven years. And as the impact of your bankruptcy filing diminishes over time, you can continue to improve your credit score. Here are a few ways to build your credit soon after filing for bankruptcy.

Practicing good credit habits

The first place you can start building your credit is by practicing good credit habits. These universal credit habits are slow in rebuilding your credit but can be very effective. These practices include:

Making Debt Payments on Time

Payment history makes up about 35% of your overall credit score. So if you are late on your monthly or yearly payments, they can significantly worsen your credit score. On the other hand, as long as you can make your debt or loan payments on time, you can also improve your credit score.

Paying off your loans on time doesn’t just make your credit score better. It also makes you look like a responsible borrower. And as a responsible borrower, you can enjoy a range of benefits such as better interest rates or even bigger loans.

Clear Balances off Your Credit Card

Using a credit card to make payments is a great way to increase your credit score. However, a popular myth exists that you should leave some unpaid balance in your account, as it further improves your credit score. Even though there is some truth to this myth, there is a faster way to improve your credit score, and it is by paying off your balance on time.

Maintaining proper credit usage is about 30% of your entire credit score. Therefore, as long as you spend less than 30% of your card’s usage ratio and pay it off fully on time, you can greatly improve your credit score.

Keep an Emergency Fund

Most people, unfortunately, fail to understand the importance of an emergency fund until they can need one. And when sudden expenses come into the picture, they can throw your carefully planned and organized budget off.

And when you do not have a rainy day fund, you might have to take out a loan or skip certain payments. It can leave you spiraling down a series of late or missed payments over months. So even if it is difficult to put aside a lot of money for a sudden expense, try to make small goals that you think you could achieve. You could even set aside a little bit of cash every month from every paycheck as soon as you get it, instead of waiting till the end of the month.

Be Patient

The most important thing that you will have to understand about fixing your credit is that there are no shortcuts. There are no quick fixes or hacks to solving your credit issues. There are a few specific principles that you will have to take care of, which will ensure the success of your credit score in the future.

Many of the hacks that come may be doing more harm than good. It could further reduce your credit score, or the new hacks might be more expensive than what they are worth. The only real way to effectively improve your credit score is by patiently working on it. Keep up to date with your bills, pay off your loans and debt on time, and put some money aside.

Continue to Monitor Your Credit Score

The best thing about the as soon as you apply for bankruptcy, it is not uncommon to see a drop of up to 200 points. And when you see that initial drop, you should continue to monitor your credit score every month as you implement new practices.

You can find many free websites and apps online to help monitor your credit score. Be sure to check if you are a victim of identity theft, as that may be contributing to your decreasing credit score. Check to see if someone has made fraudulent loan applications in your name from local banks.

Consider Credit Builder or Secured Loans

Certain banks and financial institutions can offer you credit builder loans, which help improve your credit score over time. You can also opt for a secured loan, where you borrow money already present in your savings account. So even though the interest will be going to the bank, you will still essentially pay yourself back the loan amount.

Final Thoughts

Rebuilding your credit score can take time, but it is possible. As long as you continue to practice responsible credit habits, you can eventually reconstruct your credit score and move on from bankruptcy.