Step Five: Obtain new credit.

Many people worry that they will never be able to obtain a credit card again after their bankruptcy. Other people are glad to be rid of credit cards and swear that they will never touch a piece of plastic again. No matter how you feel, credit cards provide you a valuable way to rebuild your credit history after bankruptcy. By rebuilding your credit history, you can qualify for the same low interest rates on home mortgages and car loans as other people do.

You can typically obtain credit if you demonstrate a consistent employment record and signs of financial rehabilitation. Most people find that if, after filing bankruptcy, they promptly make the payments they are left with, such as car payments, house payments, rent or utility payments, they can re-establish their credit soon after filing bankruptcy. Another opportunity to rebuild your credit is by obtaining a secured credit card. In order to obtain a secured credit card, you are required to deposit a certain amount of money with the bank offering the card. Then you are able to use the card like a regular credit card up to the amount held on deposit by the bank. Secured credit cards offer similar credit benefits as bank loans. In addition, credit unions are an excellent source for car loans after bankruptcy.

Finally, it is very likely that you will receive several unsecured credit card solicitations immediately upon the discharge (completion) of your bankruptcy. We suggest that you fill out and submit for approval a few of these applications, but use the credit wisely. If you use a credit card during any monthly cycle, then make sure that you are in a position to pay it off in full. Anytime you have a remaining balance which carries into another month, you are headed in the wrong direction and warning lights should go off in your head to once again step back and regain control of your spending. 

By using your credit card and paying it off in full on a monthly basis as we suggest, your credit score will start to improve dramatically. You will be surprised how little credit you actually need. If you utilize credit intelligently, you can make the system work to your advantage and start the process for a healthier financial lifestyle.