Reestablishing Credit Part 3 – Type of Credit for Those Who Have Filed Bankruptcy
Secured Credit Cards
Secured credit cards are a popular way for those who have filed bankruptcy to start establishing credit after a discharge. These are sometimes called pre-paid credit cards. They act more like debit cards since you are required have money deposited on the card in order to use it. However, most still report to the credit agencies. Deposit fees/yearly fees may be involved so be sure that you look carefully into this before you sign up for these types of cards.
You can usually get these cards through banks and also some retail stores now carry them in the gift card section. For more information about secured credit cards, you can speak with a financial adviser or with your bank or credit union. These secured cards are often one of the first steps in reestablishing credit.
Small loans are also an option to reestablishing credit–perhaps to buy a piece of furniture or some other household item. If you get a loan with small fixed payments each month, you can prove to other credit companies that you are able to pay off a loan. As with the secured credit cards, please always remember to read the fine print. You need to know the interest rate, payments, and any fees on a loan before signing the paperwork. Don’t go blindly into a contract that you may regret later on when you find out that you have a high interest rate that you cannot pay. Never take a loan out if you cannot handle the monthly payments.
Retail/Gas Credit Cards
If you are easily tempted to spend with normal credit cards, maybe retail specific or gas credit cards are better suited to your needs. Never choose a retail store card where you would be apt to go on shopping sprees. Gas cards are the best option since gas is a necessity but doesn’t lend to over spending and go a long way to reestablishing credit.
Before you sign up for these types of cards, make sure that you avoid large set-up fees. Try not to get cards with annual fees and make sure you know the interest rate. With these, you will want to make sure that they also report to all 3 credit bureaus–TransUnion, Equifax, and Experian.
And lastly, only spend what you can pay off at the end of the month. Some say that paying off a credit card bill before it accrues interest can hurt your credit, but this is not always true, especially when you have filed bankruptcy.
Should you have further questions regarding reestablishing credit and your own unique financial situation, please do not hesitate to contact our office to speak with an attorney today. We are here and we are ready to help.
Lam Law Firm, LLC •1335 44th Ave North • Suite 100 • Myrtle Beach, SC 29577
DISCLAIMER: The information contained on this page is for general information, only. It is not intended to be legal advice, nor should you make legal decisions based on this information. Please consult one of our attorneys to see how the law applies to your particular situation.