Getting Credit After a Discharged Bankruptcy
No one wants to go through bankruptcy, but bankruptcy laws exist to protect everyday people. If you get in over your head with debt, bankruptcy is a way to get a fresh financial start. In the wake of bankruptcy, you are sure to feel like you will never be able to repair your credit. Nothing could be further from the truth. Once you have a discharged bankruptcy, which means that you have a Discharge of Debtor document from a court of law, you can start taking steps to repair your credit. Here’s what to do:
Review Your Credit Report – Sure, your credit report is going to be pretty sad following a discharged bankruptcy. Ignorance is not bliss, however, and it is crucial to stay on top of your credit situation from day one. By law, you are entitled to one copy of each of your three credit reports per year. Use the annualcreditreport.com website to do so. If possible, sign up for a plan that allows you to check your credit reports as often as you would like.
Apply for a Secured Credit Card – Immediately following a discharged bankruptcy, there’s no way you are going to qualify for an unsecured credit card. A great alternative is to try secured credit cards instead. With these cards, the amount of money you deposit with the lender equals your credit limit. You can then make changes, and the amounts owed are deducted from your deposit. There’s one hitch, though: The secured cards you use need to report your activity to the credit bureaus, or they will not do you any good. As time goes by, check with the lender to see about having your limit increased.
Apply for Unsecured Credit Cards – After establishing at least some history with your secured credit cards, you should start seeing offers for unsecured credit cards. As exciting as this will be, you need to proceed with caution. If possible, stick with cards that have little or no upfront fees. Due to your damaged credit, you may have to put up with annual fees and other charges for a while, but you may be able to avoid them if you look hard enough. As with secured cards, make sure your unsecured cards are reported to the credit bureaus.
Don’t Carry Balances – Acquiring unsecured credit cards after a discharged bankruptcy is a significant step, but it is also a slippery slope. The last thing you need is to end up in the same dire financial straits again, so don’t carry balances from month to month. Pay your bills on time and in full every month. From time to time, it may be okay to maintain a small balance for the next month, but this should be avoided.
As you move forward, keep checking your credit reports and credit score. Before you know it, your discharged bankruptcy will no longer be holding you back, and you will be ready to start enjoying financial freedom once again.