Restoring Credit After Bankruptcy

Tuesday, January 5th, 2010 at 4:10 am

How To Repair Your Credit with Credit Cards

Very few people live their entire lives without inflicting any damage upon their Credit Scores. Whether it be high balances on credit cards, bankruptcy, collections issues or financing troubles, Credit Problems affect the best of us and are difficult to repair.

Fortunately, there are solutions to Repairing Bad Credit and restoring faith with credit agencies and bureaus. All it takes is a little time and the right strategy, and before you know it, you'll be receiving "Pre-Approved" credit offers in the mail again. One of the most effective ways To Repair Your Credit is with credit cards, and I'm going to show you how.

"Bad Credit" Credit Cards

Believe it or not, there are actually credit cards out there designed just for people who need to get back on their feet. Most of these cards have middle-of-the-road APR's with annual fees ranging from $40 - $100. Some also require an account set-up fee and other charges, which are expected with customers whose Credit Reports have black marks.

Credit Reporting

The most important thing to remember when repairing bad credit is that your card will not help unless the financial institution reports it. There are three major Credit Bureaus: Experian (1-888-397-3742), TransUnion (1-800-888-4213) and Equifax (1-800-685-1111). When you fall into collections or fall short of a loan, the financial center reports the debt to one or more of these credit bureaus, and that is how your credit is damaged. In order to repair that damage, financial institutions must also report accounts in good standing.

The best way to ensure that this happens is to find a Credit Card that reports monthly (or at least quarterly) to all Three Major Credit Bureaus. This way, your credit continues to improve exponentially as you continue to pay off all of your balances.

Balances

Most people believe that to maintain a good Credit Score, you must always pay off your credit card balance each month. This isn't true. When you are attempting to repair Damaged Credit, it is much better to keep a small balance on each card, and pay it off gradually over a period of three-to-four months. When you apply for a loan, mortgage or Line Of Credit, financial institutions want to see that you are able to effectively manage your finances. Keeping a balance and paying it off shows that you are able to manage your debt in an efficient and systematic manner.

Secure Credit Cards

If your Credit Rating is too low, then you won't be able to obtain a Visa or MasterCard. Instead, apply for a secure credit card. This works similarly to a debit card; you deposit money each month, and that amount determines your credit limit. If you choose a secure card that reports monthly to the credit bureaus, then you will be eligible for an unsecured card in a matter of months.

With Secured Credit Cards, you deposit money into a savings account, and the amount you deposit acts as your credit limit. The amount can be anywhere from $200.00 to $10,000, and it acts as a type of security deposit. It is never removed from your savings account unless you become delinquent on payments, and it accrues interest the same way a normal savings account would.

Repairing your credit with credit cards can dramatically increase your chances of achieving an "A" credit rating, and you'll be able to effectively manage your finances. Take the time now to research credit cards - both secure and unsecured - and make today the first step toward a Better Credit Score.

About the Author

Click here to view
Bad Credit Credit Cards
.

Ed Vegliante runs
www.credit-card-surplus.com
, a directory of Credit Card Offers.

i am having a difficult financial time....please help. want to get rid of Credit Card Debt. it is ruining me.?

I am in very bad credit card debt. i owe about 16 thousand and make only $462 a week take home. I also pay $450 a month for rent plus utilities. If i filed for bankruptcy, what are the procedures and how long would it take until i can restore My Credit and get credit again (i live in New York city..brooklyn) I keep trying to make payments..since i owe so much i miss payments sometimes and get way off track and have a bad time getting back on track. for instance...i finally payed my chase card $234. the customer service woman said that next payment would only be 120 and now the automated service is telling me my minimum payment is 400....how can i handle that. My main concern is getting out of this without effecting me horribly in the long run? after filing for bankruptcy how long would it take to restore credit...does it apply differently to different people? are their any programs that can help that wont hurt my credit? PLEASE HELP!!!!!!!

Bankruptcy is a reasonable thing when you're really in insurmountable debts. Your $16,000 may feel like a lot to you, but it isn't so much that you should waste your credit on it. There are ways for you to resolve this without going to that extreme. Try those first, and if all else fails, then maybe bankruptcy can be a last option.

Bankruptcy will be on your credit for between 7 and 10 years, but actually, since it is done by the court, it is then public information forever. In other words, 40 years from now, if you're filling out a job application and it asks you if you've ever declared bankruptcy, you'll have to answer yes, because they would still be able to check it.

Instead of doing that kind of permanent damage to your record over $16,000, I suggest you look into Consumer Credit Counseling, because they can set up plans for you to pay your debt down more quickly and usually get the companies to waive the interest payments and end the late fees. Check them out, and I think they will help you find a way to solve your problem less drastically.

Life After Bankruptcy