So you’ve filed Chapter 7 bankruptcy and received your discharge. After bankruptcy, individuals logically begin to consider how they can start to build back their credit which typically involves obtaining a new credit card. While some may want to steer clear of credit cards, especially those who filed bankruptcy in order to wipe out credit cards debt, it’s important to know that credit cards can be a very useful tool in enhancing your credit card post-bankruptcy. It may difficult obtaining a credit card after bankruptcy, but it is not impossible.
Credit Card after Bankruptcy
You shouldn’t expect premium rates when applying for credit cards after bankruptcy. The credit card companies typically look at your credit rating, as well as, your income as the two main factors on whether to afford you a new line of credit. If you have just finished discharging your debt using Chapter 7 bankruptcy, you have taken the credit counseling course which explains that your credit report reflects the fact you filed bankruptcy. This notation will most likely cause a drop in your overall credit score, but how much depends on where your credit was to begin with. Chapter 7 bankruptcies remain on your credit report for 7 years, indicating you are a higher credit risk.
High Risk & Secured Credit Cards
Certain credit cards are specialty created lines of credit made to cater to individuals consider “high risk”. These types of cards can sometimes come with higher interest rates and/or lower credit limits of only a few hundred dollars making them ideal for individuals trying to build up their credit.
Secured credit cards are not only an excellent way to improve your credit after bankruptcy but should be attainable directly after having your bankruptcy discharged using Chapter 7 bankruptcy. Secured credit cards work similar to a debit card in which you pay a refundable security deposit down and in return receive the same credit limit on the card. These types of cards are best used for small, systematic purchases with which you pay back over 2 to 3 billing statements. These payments include the interest, of course, however, the credit card companies will also report positive payments to the credit agency as paid or paying as agreed which should increase your overall credit score.
Credit Debt Bankruptcy Attorney
Contact a Bankruptcy Attorney if You’re Struggling with paying down your credit card balance or only able make the monthly minimum. A competent Fort Worth bankruptcy lawyer can advise you if filing bankruptcy is your best course of action and how it can affect your credit and overall financial position.