What’s the best way to get a fresh start on your credit after filing bankruptcy?
Typically when you file bankruptcy, your credit score bottoms out, you don’t have a lot of money on hand, and no one will extend any kind of credit to you. Although your debt is instantly erased, your credit score isn’t reset. In fact, it will take years to recover, but did you know that there are ways to start improving your credit score as soon as the bankruptcy is finalized?
One of the best ways to re-establish your credit after bankruptcy is to open a secured credit card account.
With a secured credit card, there is usually no question whether or not they will open the account – you’ll just need the security (deposit) that they will hold against the account. In some cases, you’ll be limited to a specified credit limit, and in others, you can set the credit limit simply by putting more funds in the security deposit account. Either way, you can apply for and get a credit card relatively fast, and just like regular credit cards, secured cards typically report to the major credit bureaus, so you’ll be able to start rebuilding your credit right away.
Secured credit cards can help in two ways:
- A secured credit card helps you to rebuild the amount of available credit on your credit report. This is a very important part of your credit score, and the more available but unused credit that you have, the better it affects your credit score.
- Demonstrating responsible usage of your secured card, including making timely, regular payments, can also affect your credit score in a very positive way. Credit is measured not only by available credit, but by the length of time that you hold accounts, and by your history of timely, regular payments.
Not sure which secured credit card is right for you?
Here are our top picks: