How Credit Cards Can Improve Your Credit Rating After Bankruptcy
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The good years were times of easy credit and a relaxed attitude to things like credit cards. Now economic times have changed and people are having to face some harsh economic realities, often finding that they have what has now become an unmanageable amount of debt, often due to irresponsible credit card spending.
For the unfortunate ones who have gone through bankruptcy, the idea of a credit card can be repellent, given that this was probably the single most important thing that contributed to their downfall.
Whilst this is totally understandable, it is not necessarily a good view to have.
What some people sometimes do not pay attention to, is what life is like after bankruptcy. Getting any sort of credit is tough as ones credit rating goes through the floor.
It is a fact that the way to restore a credit score it to prove that you can manage money safely. In other words, one has to demonstrate an ability to repay credit, just using cash all the time won't achieve this.
Whilst chapter 7 is the most popular chapter to file bankruptcy under with about 85% of debtors filing under it, it destroys your credit rating. Chapter 13 however is an alternative that does not have quite the same disastrous effects because it is effectively a repayment plan, and as the repayments are met, so ones credit rating improves. The main drawback is that the terms of the repayment plan can make life a little tough, but no assets are sold unlike chapter 7.
The next thing one can do is get a secured credit card. A secured credit card will have a limit equal to the amount of money you deposit with the card company, so the risk to the company is minimal. It will come with very high interest rates which will hit you if you miss a repayment etc. The point here is not that it's a credit card with almost no benefit, (you could just spend the cash), the point is it's credit and gives you the opportunity to show that you can manage your money responsibly.
The one thing to watch however, is for disreputable card companies. Make sure that your card is registered with the credit agencies. Disreputable card companies sometimes do not register which means that your credit score will not improve, as those bodies who matter are unaware of your card.
So it is possible to obtain a credit card after bankruptcy, but with much tighter controls. Remember that it is a means to an end, to get your credit score back to a respectable level.
Article Source: Articlelogy.com
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