For many in Maryland, one of the top post-bankruptcy priorities is rebuilding a positive credit history. This is best achieved by making responsible use of new lines of credit, as well as making timely payments on any debts that were not discharged through the consumer bankruptcy process. Knowing which forms of credit to pursue after a bankruptcy is important, as not all debt is created equal.
Creditors know that debts acquired soon after a bankruptcy are likely to be repaid, as consumers are not eligible to file again for several years. Therefore, many will send out offers for secured credit cards as soon as the news of a discharged bankruptcy hits the public record. These cards can be powerful tools in rebuilding credit, but consumers must choose carefully among the available options.
For example, many secured credit cards come with high fees. An application fee, annual fees, processing fees — these costs can quickly add up. Before long, the expense of opening the card is not worth the bump in credit score that timely repayment can bring. There are several cards currently available that offer low or no fees to sign up, and consumers should seek out the best possible options before opening a new account.
Another consideration when choosing a secured credit card is the interest rate. The primary purpose of post-bankruptcy credit is to re-establish a solid credit history. Therefore, the bulk of purchases made on these cards should be paid in full each and every billing period. That said, selecting the card with the best possible interest rate is always a good idea, provided that fees such as those mentioned above do not make the offer a poor choice.
In the months and years following a consumer bankruptcy, Maryland residents can make a great deal of headway in building their credit rating and establishing a strong financial foundation. For many, secured credit cards are a great way to reach those goals. Consumers should research the available options fully and choose the card(s) that will best serve the intended purpose.
Source: investopedia.com, “The Best Credit Cards After Bankruptcy”, Kimberly Rotter, Dec. 9, 2014