If there’s a disadvantage after one declares bankruptcy, it’s the fact that the stigma will stay with you for a long, long time. Your credit record or history will show it, and it will have an effect in all your financial transactions, especially those that involve credit in the future.
When a person has been through bankruptcy, it can be expected that getting access to any form of credit facility in the future will be very difficult. This is because all transactions that involve credit will always use the credit report or history as a point of reference. Bankruptcy implies that the person failed to manage one’s finances in the past. In such a situation and with such history, finding institutions that will trust you again will be a great challenge.
This does not mean, though, that people who have been through bankruptcy will never be able to access any credit facility now or in the future. The point of the matter is, the moment you apply for a credit card after filing a bankruptcy, the process will be a lot harder, more tedious, and more humbling perhaps; but it is possible, and it can be done.
Important Things to Keep In Mind
There are some things that people who have been through bankruptcy needs to understand if they want to have access to credit facilities again.
First, bankruptcy is a big stain on a credit score. Any future financial transactions involving credit applications, even applications for utility connections, will always be referred to an applicants credit history, credit record or credit score. Under normal circumstance, when a bad credit record comes up, the lender, or any merchant will automatically disapprove any application.
This is the reason why filing a bankruptcy should always be the last resort.
Second important thing to remember is that your financial scenario may be bad at present, but it’s not totally irreparable. There is a way out, and that is, by repairing your credit history one step at a time.
How can you do this? Applying for a credit card can be the one single step to begin the long process. However, some steps must come before the application of a credit card.
Long before your decision to get a credit card, you must have established a reliable source of income. You must be employed, or you must have a good-paying job, or if not, a good business.
The reason why you are getting a credit card must primarily be so you can slowly repair your credit history. It’s very unfortunate that at the moment, that is the only way to restore a bad credit history: by getting a credit card and slowly rebuilding your credit worthiness by using it to pay for things and services, AND meeting your obligations by paying all of them religiously over time. By doing so, your credit history will slowly improve, until such time you will be able to re-establish your credit worthiness.
Conditions When Applying For A Credit Card
To meet the credit needs of those who have been bankrupt, there are lenders who specialize on extending credit to these types of applicants. Most of these specialized lenders are divisions or branches of large banks.
As can be expected though, the credit cards that these specialized lenders issue have high interest rates, much higher than most credit cards. They also have shorter interest-free grace periods, and generally very strict terms and conditions.
A good suggestion for those who are really serious about improving their credit record is to get a Secured Credit Card. The secured credit card is backed up by a deposit in a bank account; hence there is no danger of over spending or irresponsible use of the credit facility. The good thing with Secured credit cards is that every time the card is used, credit bureaus get a report, which in turn will help a discharged bankrupt rebuild his credit.
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