Credit Cards After Bankruptcy

Initially, the idea sounds absurd, but if done right, it’s one of the smartest moves you can make. Getting new credit cards immediately after a bankruptcy can lift those credit scores that plummeted when you filed. If you make regular, on-time payments, you can boost your credit score substantially in a relatively short time. If you’ve filed or if you’re filing for bankruptcy in Illinois, an experienced Chicago bankruptcy lawyer can discuss with you in detail your options for rebuilding your credit.

It’s wise to start improving your credit score immediately after a bankruptcy. Yes, the bankruptcy remains on your record for a minimum of seven years, but with an established history of on-time payments when the bankruptcy is removed, your credit score in most cases will improve rapidly and dramatically. If you have no positive credit activity to show, your credit score in some cases will actually decline when the bankruptcy is no longer reported.

For many, the way to start anew is with a secured credit card, which you can usually obtain once your bankruptcy is discharged (that is, completed). After you pay a deposit to the card’s issuer, a secured card can be used like any other credit card. Select a card that will report your on-time payments to all of the major credit-reporting agencies; then be certain to make every payment on time, with no exceptions, or you’ve done all of this work for nothing, and your credit score will plummet. Make inexpensive purchases and avoid charging up to the limit. When credit reports begin to show that you’re making on-time payments, obtain a second card.

Be sure to understand the distinction between a secured card and a prepaid card, which is merely a fancy debit card. Prepaid card activity usually doesn’t even appear on credit reports, but there’s nothing wrong with prepaid cards, and they do help some people adhere to a budget.

Rebuilding credit post-bankruptcy also means reviewing your credit reports and scores frequently and immediately reporting any errors. It’s hard work, but if you do it right, in the long run you’ll succeed. Finally, you should understand that bankruptcy isn’t for everyone, and there’s may be a better option for you. If you’re dealing with unpayable debts in the Chicago area, discuss your options as quickly as possible with an experienced Chicago bankruptcy lawyer.