Recovering from Bankruptcy: Getting Credit with Bad Credit
Filing for bankruptcy should be a last resort option when it comes to dealing with your debts, but a lot of good can come out of it. Your slate will be wiped clean, enabling you to have a fresh start at managing your finances again. You will lose the burden of unmanageable debt and be given a new chance to be a responsible borrower. Dealing with bankruptcy and all it entails is much easier when you are positive about it, and realize it really is not the end of the world. Sure, you will have a bad credit rating for a while, but that doesn’t mean that you cannot open bank accounts, apply for credit cards, or take out a loan.
Basic Bank Accounts
You might be surprised to learn that even if you have declared yourself bankrupt as recent as within the last year, you should be able to open a new bank account. It will be a basic bank account mind you, with no chance of an overdraft. A likely scenario will be that you will have to make a substantial deposit, this could be anywhere from $100 to $500. You may also have to pay a monthly charge, and this varies between banks, although somewhere in the region of $10 is likely. Another stipulation for the account could be that you must always keep a minimum balance, so you may need to keep $100 in your account at all times unless you want to close it. On the upside, you may be issued a debit card so you can withdraw cash from ATMs and make purchases, and you will be able to create standing orders and start direct debits with the account.
Be careful when you approach banks to open a basic account, and be upfront about your bankruptcy. If you hide the fact, the bank may issue you forms to open a standard bank account which will end up being denied once it goes through the application process. Some banks would prefer to not take you on as a customer because they make very little, if any, money from these types of basic accounts.
Credit Cards to Rebuild your Credit Rating
Credit cards are a great way of repairing your bad credit rating after bankruptcy, as long as you pay off all your bills on time. Defaulting on payments will only help you to dig yourself into an even bigger hole, so don’t get a credit card unless you are sure you can handle one. The best route to go is to apply for a secured credit card. You are most likely to be successful when applying for one of these because they will be secured against a sum of money that you hold in your bank account. Say you have $500 in your bank account for instance, this means you can apply for a secured credit card with a credit limit of $500. As time goes on and you save more money in your bank account, you can raise the credit limit to match your savings. Just borrow small and pay it back in full each month, and it will do your credit rating a world of good.
Financing New Purchases
Once you are back on your feet, with your salary being paid into a bank account, and a credit card to show that you can once again manage credit responsibility, you may wish to progress even further and make a large purchase that requires you to borrow cash or pay using a finance option. Luckily getting car finance with bad credit really is not as hard as you would think after a bankruptcy. A report by Fox Business News last year revealed that more and more car buyers are being approved for loans with a low credit score. What’s more, buying a new laptop or tablet for work is possible with a personal loan from lenders who specialize in providing credit to people with bad credit ratings. Getting a bad credit loan takes a bit more hard work than usual, but as long as you can convince the lender you are a responsible borrower, and completely able to repay the loan then it should not be a problem.
Rebuild Your Financial Future
The road is long, and it won’t be easy, but you can rebuild your financial future after bankruptcy. Taking the steps explained in this article is just the beginning, as you need to prove over a long period of time that you can manage your finances successfully. As long as you do not fall into debt again, your credit rating should only get better, perhaps even better than before you declared bankruptcy.
This is a guest blog post contribution by Evelyn Robinson.