Individuals experiencing financial struggles across Arkansas may wonder what options they have to get on stronger financial ground. For those who have accrued bills they cannot pay and mounting debt, personal bankruptcy might be a viable alternative. However, a frequent concern for many is rebuilding credit after filing.

A recent blog post discussed ways to rebuild credit after filing bankruptcy, including strategies such as watching your credit score, getting strict with budgeting, making payments on time and applying for secured loans or credit cards. Applying for any sort of credit card after recently filing bankruptcy may seem counterproductive. However, there are options to responsibly apply for credit cards that can ultimately help you rebuild your credit.

Secured vs. unsecured credit cards

It can be hard to get a credit card after bankruptcy. People can consider alternatives like a secured credit card in which there is a cash deposit on the card. This is a protective device for the card issuer or company that will simultaneously help the person rebuild credit by making payments on time.

On the other hand, an unsecured credit card does not require any sort of deposit and poses much more of a risk to the card issuer. Applying for this type of credit card post-bankruptcy can be difficult as most companies require at least an average credit score to be eligible. Even if you believe you are eligible for an unsecured credit card, interest fees can be extraordinarily high, which can complicate making on-time payments.

Productively using a secured credit card

NerdWallet recommends taking the following three steps to effectively use a secured credit card:

  1. Designate the card for only small, occasional monthly purchases.
  2. Pay on time and more than the minimum. Paying your balance in full before the due date each month can go a long way toward building credit and avoiding interest fees.
  3. Monitoring your credit score to keep track of progress and improvements.

A secured credit card may not be for everyone following bankruptcy. For example, applying for a credit card and getting declined can cause even more of a hit to your credit. Carefully consider your options for rebuilding your credit and commit to the strategies that work best for you. An attorney experienced in personal bankruptcy may be able to help.