There Can Be Credit Cards After Bankruptcy
There is life and credit cards after bankruptcy. Relieved? No worries. If you just filed, or are considering, bankruptcy you may wonder if you can get a new credit card. In addition, many people who are considering filing bankruptcy wonder what that will do to their FICO score.
If you go to the official FICO website they will tell you that the impact of a bankruptcy varies from person to person. They say that if you already had a poor score you might see little change, but if you had a good score you might see a huge drop. FICO won’t name any numbers. We, however, did a brief survey and asked a handful of bankruptcy survivors how their credit score faired. Almost everyone we asked started out with a score between 650 and 700 before the bankruptcy and reported that their score was between 520 and 570 after the bankruptcy.
Fortunately, as time goes by the impact of the bankruptcy will be less and less on your credit. In 7 years it will barely be affecting your score and in 10 years it will be off your report completely. Until then what should you do about credit cards?
Keep Some Old Cards if You Can
Sometimes during bankruptcy you can elect to keep cards that you have in good standing or that you agree to pay off. This is a great way to keep credit cards after bankruptcy. But this isn’t always possible, but sometimes it is. You can also usually reaffirm your car loan and keep that. Do it! Why? Because an important part of your credit score is how long you have had certain accounts – the longer the better, as MSN Money affirms. So if you can keep the Sears card that you’ve had since you were a teenager do it. If you can reaffirm your car loan, and that makes financial sense for you, do it.
Credit Cards after Bankruptcy: Get a Secured Card
If you can’t keep at least two credit cards then you’ll want to get a secured card right away. Why? Two reasons. One, you need to start rebuilding your credit. Two, you probably can get one. There are banks that offer almost guaranteed secured cards, as long as you are willing to put the deposit down. When it comes to credit cards with bad credit a secured card is the fastest, easiest way to go.
Wait for the Offers to Arrive… but Watch the Fees
You can also, believe it or not, just sit back and wait for the credit cards after bankruptcyoffers to come it. Really. After bankruptcy you will probably be flooded with credit card offers. Why? Well, the creditors know that now you have no other debt, so they figure you are probably able to pay some bills. In addition, they know that you will have to wait years to file another bankruptcy, and they hope that you will be trying to do better and build your credit. Of course, they aren’t stupid – they also know they can charge you extra high interest and fees because, well, you have little choice if you want to rebuild. But do watch the fees – some can get a bit out of hand.
Be Responsible in the Future
The best thing to do after a bankruptcy is to start being more responsible concerning your finances. Be careful not to rack up too much debt. Pay your bills on time. Truly think about what you did wrong the first time and promise yourself that you won’t make those same mistakes again. Some people ask how many credit cards you should have – there is no firm answer but two or three should help you to rebuild.
Sources
MSN Money. http://money.msn.com/credit-cards/after-bankruptcy-new-credit-cards
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