Credit card debt is one of the most common reasons people end up filing bankruptcy. So many have mixed feelings about the idea of getting another credit afterward. It is worth noting that a bankruptcy filing stays on your credit report for seven to 10 years. However, the debtor may only have a mortgage or a car payment each month to rebuild that score, which means that it can take quite some time to rebuild your credit.
A secured credit card may be an option
Those who file bankruptcy will likely not be able to get unsecured credit cards with a modest rate of interest and the ability to carry a credit balance. However, they may be able to get a secured card where the holder deposits money in the account, which they then can spend until the balance reaches zero. In fact, there are a number of different secured card options for those with bad credit.
The benefits of secured cards
These cards may have an annual fee as low as $0 and some may provide cashback on purchases. The biggest benefit, however, is that regularly spending and paying into the balance on time each month allows the cardholder to rebuild their credit rating faster than they would otherwise.
Other options for building credit
Other proactive measures to improve your credit rating include:
- Steady employment with a regular paycheck
- Creating an emergency fund to cover the bills when the unexpected happens
- Working with a credit counselor or financial planner to create a budget
- Using a debit card linked to a bank account, but the holder will need to be careful about spending the balance before bills are covered.
Bankruptcy can be a new beginning
Many don’t like the idea of filing bankruptcy, but filing is often the quickest and smartest way to get back on solid financial footing. Those who file often learn from the experience, and may even thrive as they rise to the challenge of rebuilding their financial security and credit rating by employing the above tactics. Those with questions regarding the process and their options can speak with financial counselors or a bankruptcy attorney.
