If you’ve declared bankruptcy recently, it may feel like you’ll never bounce back. The bottom has fallen out of your credit score, and the seven to 10 years it takes for a bankruptcy to fall off your record can seem endless.
But over time, responsible use of credit will show lenders that you can be trusted to pay off what you borrow. Applying for a credit card will get easier, and your options for other kinds of credit, such as mortgages and car loans, will increase as well.
Get your credit report
Before you look at how to apply for a credit card, you need to know exactly what card issuers are going to see when they run your credit. You can get a free credit report using AnnualCreditReport.com, but you’ll probably have to pay to get your score — unless your bank or another financial institution offers it for free.
If your score is under 630, your credit is still poor after your bankruptcy, and you might be better off applying for a card aimed at people with bad credit. Such cards might require a refundable deposit, but they offer an opportunity to show your improved bill-paying mojo now that you have a clean slate.
Avoid future problems
Now that you’re out from under the debt that got you into this position in the first place, it’s the perfect time to implement some good habits that will help you avoid filing bankruptcy ever again.
- Don’t bite off more than you can chew. Make sure your credit card debt stays below 30% of your available credit to show lenders that you’re not close to maxing out your cards — this will keep your credit score nice and healthy.
- Pay your bills on time. Starting out with only one card after a bankruptcy will make it easier to keep track of monthly payments. Payment history is worth a whopping 35% of your credit score, according to FICO.
- Find great health insurance. Medical bills account for the majority of personal bankruptcies, according to NerdWallet Health. You may have found this out the hard way. Making sure your health insurance is top notch will protect your finances going forward.
- Start an emergency fund. Even with great insurance, emergencies happen. Keeping an emergency fund equal to one month’s living expenses can help you weather a crisis without racking up more debt. Over time, building that fund up to six months of living expenses is even better.
Now that you’ve survived a bankruptcy, you’re in recovery mode. Filling out a credit card application is part of that process because careful use of credit will bring your score back up.
But only apply for credit cards you actually need — the last thing you want is to tempt yourself to overspend at this critical moment.
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