Bankruptcy is a big financial decision that will linger on your credit report for seven to 10 years. But while it isn’t without some financial setbacks, recovering your credit after bankruptcy is possible and can usually be accomplished in just a few years. By following these three proven methods, you can begin to repair your score almost immediately and start turning things around:

1. Stick to your new budget

After filing for bankruptcy, one of your top priorities should be developing healthier spending and saving habits to avoid repeating past mistakes. You can calculate your new monthly budget by doubling the take-home income you get every two weeks and subtracting any taxes or deductions. Next, you’ll want to sort your expenses into the following three categories:

  1. Fixed: Includes regular monthly payments that don’t change, such as your housing payment, student loans, car payment or subscription services.
  2. Variable: Covers expenses that arise each month but tend to fluctuate, such as groceries, utilities, clothing, entertainment or gas. Be conscious of where you are prone to overspending in this category.
  3. Irregular: Irregular expenses occasionally come up, such as quarterly insurance payments, annual medical expenses, or purchasing gifts over the holidays.

It would be best if you planned to designate at least 10% of every paycheck to your savings. Having emergency savings will help ensure you don’t land back in debt if unforeseen expenses arise.

2. Consider a secured credit card

While opening a new line of credit is among one of the fastest ways to improve your credit score, there’s a good chance you won’t qualify for a standard unsecured credit card for some time after your bankruptcy. Fortunately, you could be a desirable candidate for opening a secured credit card to start restoring your credit.

A secured credit card requires an upfront deposit, usually the amount of your spending limit to protect against failure to pay. For example, if your card has a $500 spending limit, you will need to pay $500 to the credit company.

3. Consider becoming an authorized user

If you have a close friend or relative with excellent credit, they may be able to help you restore your credit by making you an authorized user. The cardholder will still be responsible for making their monthly payments, but you get the same credit they do when they pay their bills on time. However, be sure to choose someone who is financially reliable. If they miss a payment, it will hurt both of your credit scores.

The bottom line

When it comes to your credit report, bankruptcy can be a financial setback. However, it also gives you a second chance to do things right. By sticking to your budget and slowly building credit, you’ll be back on your feet sooner than you expect.