Friday, November 7, 2008

Credit Card After Bankruptcy

Consumers who have declared bankruptcy may still need a credit card. And, although a bankruptcy filing will appear on your credit report for up to 10 years, this does not mean you necessarily will have to spend a decade plastic-less.

Following a bankruptcy, the length of time until you get approved for a credit card is up to each individual issuer. Whether you get approved or denied for a credit card (along with issues of credit quality and your credit limit) are entirely up to the banks that issue credit cards. As a result, it is possible that you could be approved for a credit card soon after declaring bankruptcy, but it depends on the issuer.

Still, it is likely that any credit card you are approved for will carry a high interest rate and a very low credit limit, based on the credit risk you appear to present to lenders. Various credit cards for people with bad credit may charge an annual fee, as well. But if you want to begin repairing a damaged credit history, responsible use of a credit card could go a long way toward accomplishing that goal.

Get your spending under control. Once you are approved for a credit card, be sure that you use it carefully, perhaps only charging for things like gas and groceries rather than making unnecessary purchases with plastic. As someone who has declared bankruptcy, you should make every effort to pay monthly credit card statements in full so that you don't end up back in debt.

Another payment card option for people who may have had suffered from bankruptcy woes comes in the form of prepaid debit cards. These cards allow the user to only spend up to the total they have deposited in advance onto the card, making prepaid cards an excellent choice for consumers that are looking to control their spending.

Regardless of which type of card you choose, avoid applying for too many cards at the same time. Multiple credit card applications make you appear desperate for credit and can hurt your credit score.

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