The best way to gain new credit after a bankruptcy is to apply for a credit card. A secured credit card will require a cash deposit against it but will still be reported to the financial regulators, which will affect your credit score positively. There will be credit card companies that may offer your unsecured credit right after bankruptcy but you should be careful as many offer very steep interest rates and fees. You could also be added as an authorized user to another person's existing credit card, which may allow you to improve your credit rating if timely payments are made.
Does Applying For Credit And Being Denied Further Harm My Credit?
Applying for credit and being refused does not in itself create harm to a credit score, although there will be a footprint left (called a credit footprint) of each time you applied for credit. There will be no outcome to the credit application shown on your report and evidence of your application will stay on your credit report for one year. It does not create a negative rating but any future credit applications will show the proposed lender how many potential lines of credit you have, which could lead them to refuse an application so it is wise to find out what the cause of any refusal is exactly from the credit reporting agency before making any further applications.
What Is The Difference Between Secured Credit And Unsecured Credit?
Unsecured credit means you need not put any cash or collateral to obtain the loan whereas a secured line of credit requires a cash deposit, cosignatory or some type of collateral. After a bankruptcy it is difficult to gain unsecured lines of credit until you prove that you are creditworthy once again. It is best advised to create secured lines of credit after any bankruptcy.
If I Get a Credit Card, Should I Use It or Keep the Balance At Zero?
If you get a credit card it is important to keep the balance at zero so there are no negative impacts upon your credit rating by an outstanding debt. However, in order to re-establish credit, use it and repay any charges on a credit card as soon as possible, which will allow a positive rollover of creditworthiness.
Why and When Should I Review My Credit Score After a Bankruptcy?
Take stock of your credit report directly after a bankruptcy so you can make a practical assessment of what created the situation you found yourself in and to find lines of alternative credit. You will need to know who you had credit with before and try to find new companies to provide lines of credit in the future, as they would be more likely to offer you credit than a company that was defaulted against by you. Your credit report will be filled with status updates on each line of credit and will say which ones have been discharged by bankruptcy and which were discharged through having successfully been repaid.
For more information on Getting New Credit After Bankruptcy, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (515) 451-1260 today.