Credit Cards After Bankruptcy – Be Careful
In these difficult economic times, many people have been unable to cope financially and have gone through all the emotional pain and heartache that is bankruptcy. Having come out the other side they are thinking about how to build their credit rating, and also whether or not credit cards after bankruptcy are a good idea.
Credit cards can be one of the foremost reasons for people getting into financial difficulty. The temptation of spending and not paying off the balance every month is very appealing.
Even the minimum monthly payments can become too much as economic times change. Missing these payments can have a catastrophic effect on a credit score.
For this reason, many people decide not to have any credit cards after bankruptcy, seeing them as evil. But is that truly sensible?
The strange thing is that whilst you can destroy your financial record with credit cards, you can also restore it.
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.
You will always be subject to a much higher interest rate on a credit card after bankruptcy if it’s unsecured.
Also, beware of cowboy operators who will give you a card at extortionate rates, but not register with the credit bureau. If the card is not registered you will not benefit at all!
For a virtually risk free approach, get a secured credit card. You give the provider a sum of money, say $400, and then you can use your card up to that amount. That way, you cannot run up debt you can’t afford to repay, as you’ve effectively paid in advance.
What’s the point – why not just spend the money?
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 of your credit position. credit cards after bankruptcy are one weapon in the arsenal of credit repair. For more free information about this and bankruptcy in general visit www.howtoclaimbankruptcy.net
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