Using Credit Cards to Rebuild Credit After Bankruptcy

An important tool to getting started rebuilding credit after bankruptcy is an unsecured credit card. You need to get credit to rebuild your credit. If you find that an unsecured card is not an available option for you, try to get a secured credit card. A secured card is like a pre-paid card. You deposit money into a bank account first and then charge off of that balance. One very important tip here: Use the card regularly but do not max out your available credit each month. Use only a small portion (less than 30%) at a time and pay off that entire amount each month. Regular, restrained usage of the card will help to build back your credit, and help you to personally develop some good financial habits. Sure, some experts may say, "live on cash only", and that's a great idea, but the goal here is to rebuild your credit score as quickly as possible.

When searching for a secured card, don't jump on the first one that comes along. Look for a card with no application fee with a low annual fee. Also, make sure that the credit card issuer reports to all three major credit bureaus: Experian, TransUnion and Equifax. It's not going to help you if your efforts go unreported. And, speaking of being rewarded for good deeds, look for a card that converts to unsecured after a period of 12 to 18 months. If you are paying your bills on time and proving yourself as a trusted consumer you should be able to get this upgrade.