Using Credit Cards To Improve Credit Score After Bankruptcy

You may perceive that filing a bankruptcy saves a person from humiliation and disgrace in the face of incapability to pay off debts. Yes, it is true when you file bankruptcy it saves you from harassment but at the same time, it has its own downsides. At worse, it casts a negative impact on your credit rating. Following a bankruptcy, if a person wishes to restore a good credit score then it calls for some drastic measures. In this backdrop, credit card plays an important role. Your credit rating will surge to an impressive rating if you use credit cards prudently and make timely payments. It may appear queer to you that a person who has already filed a bankruptcy can make timely payments. However, it works wonderfully well.

At this point, you might be wondering, how to build credit with a credit card because it may be hard for you to obtain a credit card if you are already bankrupt. At the surface, it may appear that lenders will be reluctant to lend money in the face of poor economic condition. If you find yourself in a similar predicament then you need to prepare well. Many companies are willing to offer credit cards to people discharged in bankruptcy. For creditors, it presents a good opportunity to charge more interest rate by issuing cards to bankrupt people. In order to protect the interest of lenders, the Bankruptcy Abuse and  Consumer Protection Act forces people to file for a bankruptcy once in a long period of time. For instance, once you file a chapter 7 bankruptcy you cannot register a repeat complaint within 8 years.  Likewise, the waiting time for chapter 13 is 6 years. Surely, it renders some peace of mind to the creditors.

You can always opt for a secured credit card in case you cannot get your hand in an ordinary credit card. The working of this credit card may appear quite strange. The person who applies for this credit card needs to keep some deposit money with the provider. The amount deposited acts like a credit limit because the person cannot spend more than the deposited amount. You might ask what the benefit of using such a card is. You can use cash instead of a secured credit card. Well, the reason is simple and not a rocket science. It will be helpful in improving your credit rating. Using cash will not improve your credit score. Using secured credit cards after bankruptcy will begin to improve your credit rating.

Always keep in mind that if your application for a credit card is turned down then it will have a negative impact on your credit rating. Hence, unless you are fully aware of the company’s policy regarding bankrupt people you should not apply for a card. It is better to contact the company in person and get all your queries sorted out about their policy. If you are sure that, the company has no barriers in issuing credit cards to bankrupt people then you can take the leap of faith and submit your application.

Bankruptcy has its drawbacks but you can get it fixed with little effort. A credit card may be helpful in restoring your poor credit to a healthy rating. If you have not filed a bankruptcy and having doubts then it is high time that you consult a bankruptcy attorney. Major banks are more than willing to offer you a secured credit card. The best option would be to use a bank with which you regularly have business dealings. You can try for the local bank in your city.

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