Can credit cards help to rebuild credit following bankruptcy?

On Behalf of | Mar 4, 2019 | Chapter 7

Filing for bankruptcy can have a major impact on your credit score, as well as your ability to purchase a home, take out a loan or make financial transactions in the future. There are ways, however, that you can rebuild your credit once your bankruptcy has been discharged. While extensive credit card expenses may have contributed to your need to file for bankruptcy in the first place, certain credit cards may help you rebuild your credit and finally get back on track. Some credit cards, on the other hand, may cause you to accumulate even more debt even after your bankruptcy is discharged.

Subprime credit lending agencies offer credit to people who may not be able to obtain credit through traditional means. In order to offset the risk of lending to people with low credit scores, these agencies issue high interest rates, as well as additional annual fees and maintenance fees. If not careful, you could end up under water with a host of credit card debt due to these high interest rates and fees.

Other credit card agencies use other methods to offset the risk of lending to someone with poor credit. Credit cards that require you to preload money on the card can help ensure you do not spend too much. These cards also give you a chance to rebuild your credit, as you make regular payments toward your balance. As you gain credit, your credit score may grow even higher.

This information is intended to educate and should not be taken as legal advice.