Eliminate Credit Debt

While a bankruptcy brings serious consequences to your credit file, it is possible to obtain credit after bankruptcy. Even though a bankruptcy may stay on your credit report for as long as ten years, you can bounce back from filing Chapter 7 or Chapter 13 and go on to have stellar credit if you work at it.

One of the easiest ways to obtain credit after bankruptcy is to apply for a secured credit card. This is the type of account that requires a cash deposit upfront and then your credit limit will be approximately the amount of your deposit, although there may be fees taken out as well, which would lower your credit limit.

A secured credit card offers a win-win situation for everyone involved. The issuing bank knows they’ll get their money because they already have it and you get credit. Although you have made a cash deposit, you still make payments just like you would with a regular credit card. The cash deposit is there in case you do not make the payments.

By making timely payments each month, you have a chance to rebuild your credit after bankruptcy. In addition, some banks and credit unions that issue secure credit cards will switch you to an unsecured card after so many months of paying on time. Of course, the idea is for these timely payments to be reported to the three credit bureaus so that your credit score will rise and you will qualify for additional credit.

Although you can obtain credit after bankruptcy, you will want to review secured credit card offers very carefully. Some of them are so saturated with fees that your initial cash deposit could be gone before you even get to use the card. Since these cards are geared toward consumers with bad credit, though, you’re not going to find the kind of attractive offers you may find with regular credit cards; however, it pays to comparison shop because the deals offered through secured credit cards vary widely.