Credit Cards After Bankruptcy – How To Re-establish Credit After Bankruptcy

If credit cards were responsible for your bankruptcy, you may be thinking that the last thing you need is another credit card. As with everything, credit cards can serve a good purpose or they can create hardships for you.

The fact is that your FICO score and credit history are based on how you handle lines of credit. In other words, if you want to rebuild your credit, you need to have a line of credit opened and prove to your creditors that you are responsible and can pay your debts on time. It’s a catch-22. You need some level of debt to prove that you can manage debt well.

Before you run out and apply for a credit card, you need to analyze and understand how you got yourself into debt in the past. If you were able to file for bankruptcy prior to the new bankruptcy law of October, 2005 – you probably walked away debt free.

Take advantage of this opportunity to re-establish your credit. There are large banks that currently offer credit cards to people with bad credit. You can apply for these cards online and get a quick response.

Once you get your credit card, stick to the following rules:

1. Always pay your bills on time. No excuses.

2. Do not apply for too many lines of credit – two is enough. Having too many lines of credit opened, may lead your creditors to believe that you are robbing Peter to pay Paul.

3. Do not max out your credit card. Spend less than 70% of the maximum value of your credit. This means that, if your limit is $500, do not charge more than $350.

4. If you’ve been able to establish a positive relationship with a creditor by practicing steps 1 through 3, stick with that creditor’s card.

Delia Galley writes about debt management and credit counseling. For additional resources on bankruptcy and credit repair, visit www.poorcreditgenie.com. The website offers a rich library of information on how to rebuild your credit.