• 08
  • September
    2011

In our previous post, we began looking at ways consumers can begin repairing their credit after a bankruptcy. As we mentioned, improvements in one's credit score can begin to be seen as early as 12 months from the date of filing for bankruptcy if one is careful and puts in a little effort.

We already mentioned that correcting reporting errors, paying bills on time, and keeping current on rent payments as good steps to take. Here we'll talk about how to approach credit cards after bankruptcy.

Some consumers are tempted to avoid credit at all costs after a bankruptcy. Doing so, however, isn't necessarily a good option. Responsible use of credit is an excellent way to speed up the repair of your credit score.

After bankruptcy, the quality of credit card offers you receive-if any-will decline. Many of them will have higher interest rates and charge greater fees. One suggestion for those coming out of bankruptcy is to apply for a secured credit card. These cards require you to deposit a sum of money that serves as your credit line. Some of these cards have high fees, and you should avoid those. You should also be sure the card issuer reports to one of the major credit reporting agencies.

If you do decide to look into unsecured credit cards, you should do so with caution. Department store and gasoline credit cards are typically the easiest to qualify for, but they also usually the highest rates. Still, a high interest card without any annual fees can be beneficial, provided it is regularly used and immediately paid off. After a period of time where good use has been made of the card, consumers can request that the card issuer to decrease the interest rate or apply for a card that has better terms.

Repairing your credit after bankruptcy is not a matter for despair. It takes a little work and some diligence, but it is not an impossible task.

Source: creditcards.com, "5 ways to rebuild credit after bankruptcy," Tamara E. Holmes, Sep 1, 2011.