A bankruptcy is not good at all. It stays on your credit card report for 7 to 10 years. There is a possibility that your credit card score will remain low until you take some steps to make it better in no time.
But it takes a lot of persistence and patience and a steady stream of on-time payments on a monthly basis to rebuild the credit respectively. You have to think on smaller time frame when you begin applying for the credit cards. After the bankruptcy, there is a possibility that you may not be eligible for the consumer credit card at all.
How to rebuild the credit in two ways
1. Get a secured card: The secured card provides the best means when you are coming out of bankruptcy. Through this card, you can deposit some money in the savings account and that such a deposit secures the line of credit for you.
For instance, if you make a 300 dollars deposit that has an annual fee of 29 dollars, then your credit card limit will be 271 dollars. If you pay the account on time and make small purchases monthly, then this secured card will be quite helpful towards your credit. The usage of 10 to 15 percent of credit line is good, but you need to keep your balances low.
2. Get a Retail Card: The department store cards and the retail cards have relaxed credit requirements that will make you eligible to buy any of them after the bankruptcy. This can only happen once you have made a series of steady payment on time through a secured card respectively.
You have to pay the account entirely in every month, because of the higher interest rates that are linked with these cards.
How the credit can be used wisely
It is better for you to use your credit wisely after you get relieved from the post-bankruptcy period. You can follow the given steps below.
1. Set up automatic payments: It happens that several people opt not to receive the paper bills and tend to forget making the payment on time. So, you need to set up automatic payments so that the payments get directly deducted from your account each month on the respective due date.
2. Only borrow what you can afford to borrow: As soon as you know your budget and limit, you will know what you can afford. If on the regular budget you cannot meet the expenses for a trip to Bali, do not risk using a credit card to fund such a trip. Kindly refrain from using credit card excessively and use it only for those things that you can afford to buy.
3. Make a budget and stick to it: You need to evaluate on what you can manage to pay on your debts monthly after you have paid off your expenses. If your budget for food is 200 dollars, do not spend more on it. Overspending on one expense will not allow you to pay your debts on time.
After bankruptcy, you have to move cautiously and rebuild your credit in the correct manner. You have to ensure that you pay your bills on the stated time and avoid the bad credit score again from the late payments respectively. If you use your bank account consistently and responsibly, you will never become a victim to financial difficulty at all.