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How to improve your credit score after bankruptcy

For our Connecticut readers who have recently been through the process of bankruptcy, taking out yet another credit card may seem like a terrible idea. After all, the reason many individuals have had to seek help from a bankruptcy law firm was because they were in over their heads on credit card debt.

But a carefully selected credit card can help a person rebuild good credit in the aftermath of bankruptcy. And someone who has filed for bankruptcy doesn't have to wait seven to 10 years for their bankruptcy history to disappear from their credit report to begin improving their credit score now. In fact, the longer a well-maintained account is held in an individual's name, the more credence it is given by companies who assess credit scores.

The key to building credit with credit cards is making payments in full and on time, no matter what kind of card an individual obtains. But some credit cards are better than others. The best cards for people approaching life after bankruptcy are secured cards, or those that require the cardholder to place a security deposit with the issuer.

For individuals who procure a secured credit card, they should select a credit card company that makes monthly reports to the three major agencies that are responsible for credit reporting. Without exception, payments must be made on time, because a single late payment can seriously drive credit scores down. And finally, it is best to use only 10 or 15 percent of a card's available credit. When big ticket items are charged to the card, a person should be able to pay off the balance right away, otherwise they should forgo the purchase.

After a person has kept their spending in check with a secured credit card for several months, they may be ready to apply for a second card, as long as it is also managed well and does not create the temptation to overspend. Through careful budgeting and attention to one's debt to income ratio, a person can learn to spend within their means and avoid bankruptcy in the future.

Source: MSN Money, "Best credit cards after bankruptcy," Gerri Detweiler, Nov. 5, 2012

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