The first step after declaring bankruptcy is to repair your credit rating. But is taking credit card a smart move?
While credit cards have been responsible for many people getting into debt, they can also be saviour in certain cases. This is particularly true after bankruptcy.
The method of restoring your credit rating is not to shun credit, but to show you can repay your debt. By taking little debt, repaying it on time is the excellent method of restoring your credit score.
So, is it possible to receive a credit card after bankruptcy? Yes if you shop around. You can get an unsecured card, but the problem is that you will pay a far higher interest rate because of your credit history.
Also, stay away from rogue operators who will give you a card at exorbitant rates, but not report to the credit bureau. If the card is not reported, you will not gain anything.
The best alternative is to go for a secured credit card. Here you deposit a sum of money, say $500, and the company will offer you credit up to that amount. The card is “secure” since you are utilizing funds that you have deposited with them.
But why do this and not simply use the $500 as cash?
This is because, using cash will not enhance your credit score, nor just shunning the credit. Here, you are utilizing credit which is assured to be repaid, and your credit rating will go up.
Don’t forget, repaying credit enhances your credit score using cash simply is risk free, but won’t enhance your rating.