How Do You Use Credit Cards to Rebuild Credit After Bankruptcy?


Quick Answer

Use credit cards to rebuild credit after bankruptcy by finding a bankruptcy-friendly creditor to obtain a credit card from and by making timely payments to help raise the credit score over time. Secured cards are one of the easiest types of cards to get, making them a good option for rebuilding credit history.

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Full Answer

A secured credit card secures a credit line with cash out of the user's pocket. For example, to get a $500 credit line, the user must send his credit card issuer a check or initiate a bank withdrawal for $500. The issuer then holds this money until he decides to "unsecure" the card and return the money. While the issuer has the money, the cardholder can use the card and make payments on it like a regular credit card. These timely payments are recorded on the cardholder's credit report and over time help raise his credit score. As the bankruptcy ages, its impact on credit lowers, and the user's credit score improves. Once the score is in the fair to good credit range, the user is likely to receive regular credit card approvals since he has proven that he is able to manage his post-bankruptcy credit with a secured card.

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