Okay, you filed for bankruptcy and you’re worried about your credit score. Don’t panic! Your credit isn’t ruined. Of course, after a bankruptcy your credit score will be significantly lower, but through patience and on-time monthly payments you can rebuild your credit score after bankruptcy.
There’s a common misconception that when you file for bankruptcy you won’t be able to get any credit cards. This is false. You actually have a good chance of getting a credit card because you have now lowered your debts and been given a clean slate.
Consumer credit cards are probably out of the picture, but secured credit cards are great for people with lower-than-average credit that are trying to improve their credit score.
Secured credit cards are actually designed for people who want to improve their credit. The difference between a secured credit card and a normal credit card is that secured credit cards require an initial deposit. This deposit is used as a “safety net” in case you fail to pay your bill.
Typically your line of credit is equal to your deposit. So lets say you made a deposit of $500, your line of credit would be $500. The deposit makes secured credit cards safe to lenders and means they are more lenient on which applicants they approve. This makes getting a secured credit card after bankruptcy much easier.
Secured credit cards are not always a sure thing. Bankruptcies and other negative remarks on your credit report can still prevent you from opening one. But here’s a quick tip: local credit unions are much more lenient than large lenders when issuing secured credit cards. If you can’t get a card through a large institution then check out a local credit union, your chances are much higher of being approved.
IMPORTANT ADVICE: Make sure that your secured credit card reports to all three three credit bureaus; TransUnion, Equifax, & Experian.
Remember to keep your purchases low and fully pay of the balance each and every month. The last thing you want is creating more negative marks on your credit report with your new credit card. They are a powerful tool for improving credit and used correctly can make a great positive impact on improving your credit score after bankruptcy.
This article is not meant as legal advice, and Bankruptcy is very complicated depending on every persons overall financial situation. So, if you are considering any chapter of the bankruptcy code, is it called one of our attorneys for a free, same day consultation.
To learn more about Chapter 7 or Chapter 13 Bankruptcy, the federal government has excellent information about it on their website at http://www.uscourts.gov/services-forms/bankruptcy
Fairmax Law™ is a Service of Jaafar Law Group PLLC and is a designated debt relief agency that helps clients file bankruptcy under the federal bankruptcy code.