Personal bankruptcy used to have a social stigma attached to it, but these days, a bankruptcy filing is so common that few people think about it anymore. A great number of Americans apply for bankruptcy every year.
The reasons for a bankruptcy filing can be quite diverse - loss of job, injury, or just a run of bad luck. Federal law permits people who can show that they simply can't repay debts the chance to have those financial obligations discharged in court. Having your outstanding debts forgiven is not necessarily easy; there is a price to be paid for getting a new start. The discharged debts become taxable income. The filing will remain a black mark on your credit report for as long as ten years.
There are credit card companies that may offer charge cards to individuals who have just emerged from bankruptcy court. Companies don't provide credit to the recently broke to be kind; they know that once you emerge from court, you can't file for bankruptcy again for eight years. Your credit card will be more expensive than the typical card, and you'll have to pay greater interest rates, but you can get a credit card after bankruptcy.
Here are several tips that may help you raise your credit score after a bankruptcy filing:
Ask for a bigger credit limit. Credit bureaus use something called a debt-to-credit ratio when establishing a FICO score, measuring how much debt you have when compared to how much you can potentially owe. In a perfect world, you want to owe as little as possible when compared to your total limit. Your FICO score is based, to an extent, on the amount of purchasing power at your disposal. An increase in your available limit can help that right away. The greater your credit limit, the healthier your ratio.
Get a major charge card. When possible, you should submit an application for accounts from larger banks, as they tend to carry more 'weight" with the bureaus. An account from Citibank can aid your score more than a credit card from Bank on the Corner. The large banks are not going to approve you for anything right away; you'll have to start with expensive cards from small card-issuing banks. Acquire the expensive credit cards when they are offered and use them wisely; you may have little other choice. Submit your payment in full if possible, so that you don't have to pay the high interest rates that you will undoubtedly be charged. Make recurring purchases and pay the bill promptly.
It can be tough emerging from personal bankruptcy, but it is possible. Reestablishing financial competence takes time and effort, but over a period of time, you can do it.
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