After years of struggling with poor credit, many consumers worry about the consequences of declaring bankruptcy. Fearing that bankruptcy will finish off what's left of their credit, they wonder how they will ever buy a home, or another car. What happens when they have to replace appliances and furniture? Will their kids be able to get student loans to go to college?
However, as the bankruptcy process becomes final and old debts are discharged, the daily mail brings a few surprises. Pre-approved offers for auto financing and credit cards begin to arrive. Did somebody make a mistake? No, they really are offering you credit.
Don't rush out to the first car dealer who offers you financing, especially if the salesman directs you to limited choices priced well over Kelly Blue Book value. Shop around for both cars and financing terms.
And just because you can get a credit card doesn't mean you should obtain that particular card. It's important to review the terms and conditions of the offers.
The cards typically have a low credit limit, around $300. Some have "application fees" of $100 or more. Interest rates vary widely, but are usually on the high side. One lender lowers the interest rate if the card is paid in full. Another offers to increase credit limits every six months. Sounds good, until you read the fine print that tells you every increase in credit limit incurs a $50 fee. The convenience of making phone or internet payments may cost around $15. And the fees for making late payments or going over the limit can double or triple your minimum payment, or result in the creditor demanding the full balance immediately.
A good way to start rebuilding your credit is to select the two best offers. The most convenient plan is to carry one Visa card and one MasterCard. If the card limit is $300, try to keep the balance below $100. If possible, pay the balance in full every month in order to maximize your credit score.
If you're overwhelmed by financial problems, don't let future credit fears scare you away from bankruptcy. Contact Attorney Kristie Radloff to review your situation and discuss your options. You may be back on the road to good credit sooner than you think!