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You can’t believe it actually happened. Maybe it came about quickly, or maybe it was a long time coming, something you’d avoided facing for as long as possible.

You’ve filed for bankruptcy.

It’s something you used to only read about other people doing, yet here you are. If you’re feeling ashamed and alone, don’t: According to statistics from Epiq Systems, there were over 1.3 million bankruptcy filings last year. You may also be feeling angry, relieved, depressed … and maybe a little bit tired.

But here’s something else you should feel: hopeful. Yes, there is life after bankruptcy. In fact, filing a Chapter 7 or Chapter 13 bankruptcy is actually the first, often necessary, step toward restoring one’s credit. And while the temptation might be to put all of this behind you and never look at another credit report again, taking the opposite tack will bring you more peace of mind — by actively managing your credit and finances now, you’ll be able to mitigate the impact your bankruptcy has on your future.

One powerful way to offset the effects of bankruptcy might seem counter-intuitive: Get, and use, a credit card. The goal here, of course, isn’t to rack up more debt (which can hurt your credit score), but to show you can make timely payments. In order to avoid more debt, pay off the balance each month. And avoid large balances, which can negatively affect credit scores. Most important, though: Make EVERY payment on time. If organization isn’t your forte, or you’re a proud procrastinator, pay your credit card bill when you first receive it or, better yet, sign up for an auto-pay option.

If you can’t qualify for an unsecured credit card right away, a secured card may be your next best option. These cards, which require a collateral deposit (typically the amount of your credit line), are an excellent tool for rebuilding credit. Bear in mind, however, they’re not all created equal: Fees can vary wildly, and some disreputable providers are more akin to subprime mortgage lenders. Look closely at all fee schedules, consider a trusted institution that you know (although not one that was included in your bankruptcy filing), and don’t balk at the higher interest rates — this card is not for carrying a balance, it’s for building good credit. Finally, be sure the card issuer reports your payments to the big three credit bureaus, and double check that the account isn’t flagged as being a secured card.

Ideally, after a few months of timely payments on your secured credit card, you’ll begin to get offers for unsecured cards, and you can switch to something with lower fees and interest rates.

A track record of timely payments, along with strict, careful budgeting to keep debt under control, can restore your creditworthiness way, way ahead of the typical 7-10 years it takes for a bankruptcy to be removed from your credit report. Taking charge now will only get you there sooner.

One of our favorite movies of all time is Rocky IV, where he defeats the unbeatable Drago. Rocky gets hit hard, but doesn’t give up, and because of his hard work and training, defeats his opponent. Recovering from a bankruptcy is a lot like Rocky’s journey (minus the cool soundtrack).

When you file for bankruptcy, it’s usually your last resort. You’ve been backed into a corner and the punches keep coming, but bankruptcy lets you get out of that corner and continue the fight. It’s time to put on the gloves and face that seemingly unbeatable foe and get started repairing your credit score.

4 Steps to Repairing Your Credit After Bankrupty

Examine Your Credit Report: The first step is to get a copy of your credit report and go over it with a fine-toothed comb. You need to check to make sure all the accounts were placed on the bankruptcy and that all the information is correct. There may be negative accounts on your credit report that were paid off prior to the bankruptcy which have inaccurate information or shouldn’t even be on it anymore. The bankruptcy will have a big impact on your credit score, so anything you can do to raise it by making sure everything on your report is correct only helps.

Create a Budget: If you declared bankruptcy, then you were in a negative debt situation to begin with. You need to create a realistic budget based on your income. This budget needs to include all bills and necessities as well as an amount dedicated to repairing your credit. You can use this to start a nest egg savings before applying for a new credit or use it to make payments on new credit.

Build Your Credit Score: Declaring bankruptcy doesn’t mean you will not be eligible for any credit at all. There are companies that specialize in providing credit, such as credit cards, to people with bad credit scores and bankruptcy. The company is taking a risk giving you credit, so the interest rates on these cards are high. You can also apply for a secured credit card, where you pay the credit amount first and they keep it on hand in case you default on the card. You have credit and the card will charge interest and report to the credit bureaus.

Note: Do not apply to several credit cards or other credit lines. Bankruptcy is a red flag for most creditors and will be difficult for you to be approved. Each time a creditor looks at your report, it can have an impact on your score. These are called hard inquiries.

Pay On Time: It takes 10 years for a bankruptcy to be taken off your credit score, so it’s important to build your credit the right way. Make sure you pay all of your bills on time because late payments create a negative impact. Do not get too much credit debt and keep your balances to about 10 percent of the total limit.

If you follow these steps, then the bankruptcy can be the inspiration needed to beat that unstoppable foe of debt and get your life back on track. You can give debt a K.O. if you are willing to be disciplined and fight to the finish.

We all make mistakes. We order a regular soda instead of diet, we get a regrettable tattoo, and we miss a car payment. So, choke down some high fructose corn syrup, find the humor in the bright, new Mighty Mouse tattoo, and know that someday that blemish on your credit report will go away.

While credit reporting practices and scoring methods differ depending on the creditor, potential lender, and credit bureau, payment history is always one of the primary factors in a credit score. In FICO (Fair Isaac Corporation) scoring, payment history is weighted at a hefty 35% of a credit score, which is more significant than any other factor. In the VantageScore calculation used by the top three credit bureaus (TransUnion, Equifax, and Experian), the exact formula is a black box, but we know payment history is weighted in the 30% range and is again more important than other factors. Specific industries – like the mortgage industry and the automobile industry – have their own algorithms for credit scoring, but most use either the FICO or VantageScore as a starting point.

There are components of payment history that range from amount past due on an account to frequency and severity of payment tardiness to liens and court judgments. The weight of these factors on the payment history varies, since some creditors report immediately, some report based on a 2-3 rolling period, and some don’t report at all. To further complicate matters, some calculations look at the full seven years of credit history (FICO) and others at shorter periods like two years (VantageScore).

At Ovation, we advise our clients to assume all financial information will affect credit scores for seven years. Thus, all of us would do well to treat our credit score like our reputation or identity and take very good care of it. Tools like automatic bank payments can help to ensure our financial commitments are met on time. If a payment is missed, don’t wait to bring the account into good standing.

Credit scoring is confusing and complicated and sometimes frustrating for consumers. While the weight of a financial blemish is beyond our control, the blemish itself is well within our control – The easiest way to take control of our financial reputation and keep a solid credit score is to live within our means and make our payments on time. If a payment is missed, at least the ramifications are shorter term than impulsive ink!