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Credit Cards After Bankruptcy – What You Should Know

Friday, June 11th, 2010

People who have felt the pain and humiliation of bankruptcy may direct some of their anger towards the credit card industry. However, they also have a need to rebuild their credit score and may be wondering about credit cards after bankruptcy.

The easy credit available through a credit card has been one of the main reasons for people getting into financial difficulty.

At first the minimum payments are manageable, but as more debt is accrued and economic times start to take their effect, even this can become too much. Minimum payments are missed and one’s credit score deteriorates.

For this reason, many people decide not to have any credit cards after bankruptcy, seeing them as evil. But is that truly sensible?

Contrary to what many may think, a credit card can be key to restoring your credit record.

Avoiding debt is not the answer. Sure, it’s sensible, vital in fact, not to get into debt that you cannot repay, but demonstrating you can repay some debt is key to restoring your financial record.

Perhaps surprisingly, it is possible to obtain credit cards after bankruptcy if you are prepared to do some legwork. It will be at a much higher interest rate though.

Before going any further, a word of warning. Stay away from unscrupulous card issuers. They will charge an exhorbitant rate of interest, but may not register your card. By law, any card should be registered with the credit authorities – if it isn’t you won’t see any benefit to your credit score, as no one will know about it!

The best thing to do is to take out a secured credit card. This is where you deposit a sum of money, say $500, and the company will give you credit up to that $500. The card is “secure” as you are using funds that you have deposited with them.

So why bother with the card at all?

The point is, using cash does not improve your credit score, nor does simply staying away from credit. This way, you are using credit which is guaranteed to be repaid (you deposited the money remember?), and your credit rating will start to improve.

If you want to improve your credit score a secured credit card will help considerably, and with minimal risk to yourself.

This is just one aspect of your credit rating. credit cards after bankruptcy are one weapon in the arsenal of credit restoration. For further free information about this and bankruptcy in general visit www.howtoclaimbankruptcy.net Get a totally unique version of this article from our article submission service


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