Should you sign up for credit cards after you file for bankruptcy and get your discharge? The ANSWER IS YES!
After getting all your debt discharged, its normal to feel scared and nervous about applying for and having another credit card in your wallet. However, I am here to tell you that it is imperative for you to apply for and use a credit card after you get your bankruptcy discharge. Credit cards offer people the change to start rebuilding a solid credit profile. Here are some tips for getting back to using credit cards.
Tip #1: Apply for and use a secured credit card. Secured credit cards differ from traditional credit cards because they require a deposit to obtain this credit card. The deposit eliminates the risk to the bank and they are more likely to lend credit to a person who has filed for bankruptcy. Additionally, secured credit cards report to the Credit Bureaus just like traditional credit cards.
Tip #2: Use your credit card often. Even if you choose not to get a secured credit card, get a credit card either way. Use your new card once a month for gas or groceries. Use it for recurring bills, such as Netflix/Hulu or any other consistent bill you may have. The key is to use the credit card for small purchases and do not have a balance higher than 30% of your credit limit.
Tip #3: Pay off your credit card in full every month. Pay the statement balance by the due date. If you do this, you are not paying anything in interest or late fees while rebuilding your credit at the same time.
Tip #4: Ask the credit card company for a better deal. After 6-12 months of on-time payments, call the credit card company and negotiate a lower interest rate or see if you can transfer your secured card into an unsecured credit card. You will get a check in the mail for the initial deposit you made. You can also ask for a higher credit limit. The key is to have a low balance on a high credit limit. This shows you can manage your deb responsibly.
Filing for Bankruptcy isn’t the end of the world. It doesn’t ruin your credit forever. If you follow these simple strategies, you will see a vast improvement in your credit score within 12-24 months. This will help you finance a major purchase like a car or home.