After filing for bankruptcy, you likely want to get started on rebuilding your credit right away. But what options do you have?
There are many steps you can take when looking into getting a new card after bankruptcy. But should you?
Credit cards as a trust-building tool
Nerd Wallet asks when it is appropriate to apply for a credit card again after filing for bankruptcy. For many people, applying for a new one right after filing for bankruptcy is actually a wise move.
Why? Because it helps build trust back with creditors and lenders again. A credit card is the fastest way to build that rapport, in fact.
Use a credit card and stick to the lowest utilization ratio possible; think 15 percent instead of the usual 30 percent. Then, make sure to pay back all bills on time and in full. This can quickly show lenders that they can trust a person to borrow money and pay it back.
Worried about getting back into debt?
Of course, this is not a great option for everyone. Some people might not have their spending habits wrangled yet. This could lead them directly back into the same situation that got them to file for bankruptcy in the first place.
For those individuals, it is best to sit out having a credit card for a period of time. Or, it is possible to get a secured credit card instead and start from there.
A secured credit card works more like a debit card with collateral, so it is much harder for most people to overspend with it. It is a good option for anyone seeking to rebuild their credit.