One of the greatest attributes of bankruptcy is its ability to help begin a new chapter in your financial life. A large portion of getting back on the right track with your finances is working to improve your credit score. While there are several ways to increase your credit score after filing bankruptcy, many individuals turn to sign up for deposit based credit cards, known as “secured credit cards”. These cards, when used responsibly and with a plan in mind are wonderful at increasing your credit score, but you should use caution and make sure to read the fine print before applying for a Post-Bankruptcy Credit Card.
Credit Card Fees
Buyer beware is certainly an excellent word of advice when combing through credit card offerings after you file bankruptcy. With all the finance companies and banks getting into the credit card market, there are many cards out there that are just plain bad. So, when you begin searching for a new credit card, make sure you take into account all program and set up fees, participation fees, and annual percentage rates. For example, a Credit Card Offering an initial credit line of $250. Of course, you must pay the initial $250 in the form of a refundable deposit. However, once the fine print is read, here’s what the credit card offering actually proposed:
- 9.9% APR and 19.9% APR for Cash Advances
- $48 Annual Fee
- $29 Account Set-Up Fee
- $95 Program Fee
- $6 Monthly Participation Fee
Add all these up and your starting line of credit is diminished to a measly $72. The main takeaway? Apply for cards that don’t eat up over half your line of credit in fees.
Credit Cards After Bankruptcy
With a diminished credit score you can expect to pay more fees and higher interest rates for your credit, but you should certainly shop around for the best deals for you. Discover it Secured and Capital One Secured are both excellent post-bankruptcy credit card with no annual fees attached. Once you have found, applied for, and been awarded a new line of credit, you must use it strategically to increase your credit score. You should only spend the money on items that are necessary and that don’t utilize over 50% of your credit line. Additionally, make sure you make the minimum payment, on time every month so that you have positive information being reported to the credit bureaus.
Contact your local Dallas bankruptcy attorney if you are having trouble finding ways to enhance your credit score after bankruptcy. An experienced bankruptcy lawyer will likely have suggestions for you based on the success of previous clients.