Once someone files for bankruptcy they begin looking for ways to improve their credit standing. This is because bankruptcy is a negative mark on your credit report and will cause a significant decrease in your credit score.
The good news is that despite the fact that bankruptcy stays on your credit report for as long as 10 years, your credit score can start increasing immediately.
While it will be hard to qualify for a credit card let alone a loan for a little while there are systems in place to help build credit.
A great option to start improving credit is a secured credit card. The big difference between a secured and an unsecured card is that to obtain a secured credit card you will have to make a deposit to the company. This deposit is considered collateral for the purchases you will make. That is why it usually equals the amount of your credit limit.
Although you make an initial deposit this card does not act as a debit card. You will receive a monthly bill for the charges you've accrued and a payment will be due. Should you choose to pay the minimum and carry a balance then you will be responsible for finance charges on what remains unpaid.
Another option for obtaining a credit card is to apply for a store credit card. Store cards are typically issued from retail stores and the card holder is offered incentives such as merchandise discounts for signing up for the card. Store cards generally increase spending within the store itself as well as in outside businesses. This is a double incentive for the store, not to mention the marketing behind having your name and logo on someone's credit card. These factors make it common for stores to be more lenient on who can qualify to carry credit with them.
Once you've obtained a credit card make sure your payments are made on time. This says a lot about you are a borrower and will look good with creditors.
Before you know it your credit will begin to increase and you will be able to qualify with more lenders. It is important that as your borrowing privileges return you don't fall into the same patterns that led you to bankruptcy in the first place.
