Bankruptcy sounds scary, but it’s not all sadness. In fact, some studies show that within two years of declaring bankruptcy, most people have raised their credit scores above 640, which is considered fair or good credit territory. And when these borrowers applied for a new mortgage, they paid, on average, only 19 basis points more in interest than those without a history of bankruptcy.

The truth is, bankruptcy can be a difficult time, but it can also be a time for a fresh start to take back control of your finances and make a turnaround. These key steps will quickly increase your credit score and set you on the path to a more prosperous financial future.

You can get a free annual report at freecreditreport.com. After bankruptcy, it is especially essential that your report accurately states that you are no longer liable for debts that were written off during your bankruptcy. And you’ll want to check your report regularly, to keep track of any questionable changes – as well as to keep tabs on improving your credit history.

People who file for bankruptcy can be bombarded with credit repair offers. Be on the lookout for some classic signs of scams, such as asking for payment up front, not telling yourself your legal rights, or telling you not to contact credit bureaus, the report says. Federal Trade Commission. They may even suggest that you apply for credit using your employer ID number (instead of your social security number) or use a fake social security number. Both of these cases constitute identity fraud and it goes without saying that they are illegal. Consult your state attorney general’s office or the FTC if you are in any doubt as to the veracity of a credit repair offer.

Now is the time to start rebuilding your credit, and a secured credit card can be one of the most powerful tools for a fresh start, according to the credit reporting agency. Experiential. First, it is important that you have an emergency fund of three to six months of living expenses saved, before committing much-needed resources for a secure card. Once you have emergency savings, consider getting a secured credit card using a down payment to secure a line of credit. After you’ve made on-time payments to your secure card for about a year, you will likely qualify for an unsecured card and see a measurable increase in your credit score.

Your credit mix is ​​the variety of loans on your credit report. The way you deal with this mix is ​​reflected in your credit score. Your credit mix can count up to 10% of your overall score. Companies such as RentTrack or RentReporters allow you to report your monthly payments on time to the credit bureaus. This can increase your credit by 50 to 70 points in a few months. Other options include small so-called “credit builder” loans, which allow you to repay manageable amounts of principal from $ 500 to $ 2,000 over a few years. It can help you build confidence in your financial management skills as you gradually increase your credit score.

Remember, using any credit wisely (auto loans, mortgages, etc.) can increase your score. But it has to be a wise use: don’t take new credit if you’re not sure you can handle it. Otherwise, you will end up where you started.

Bankruptcy can be a new beginning – a chance to wipe out a clean sweep and build a stronger, more prosperous future. See this as an opportunity to grow from your experiences and make smarter financial choices every day.

CHECK: We’re in a ‘golden age’ of getting a new job, experts say – here’s how to get it Going through Growing up with Acorns + CNBC.

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