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Why you should use a credit card after declaring bankruptcy

On Behalf of | Mar 13, 2022 | Bankruptcy

Many people who struggle with bankruptcy know that they have too much credit card debt. If they ask for advice from friends and family, people will tell them not to use credit cards anymore and only to spend the cash that they earn.

There are a lot of reasons why this is problematic, starting with the fact that credit cards are often used to buy things online, and it can be restrictive not to have access to them. But even without this factor, it can still be very helpful to use a credit card after declaring bankruptcy. If this sounds counterintuitive, all you have to do is think about your credit score.

You can fix your credit score

The big downside to bankruptcy is that it can have a negative impact on your credit score. Some people avoid it for this very reason.

Rather than avoiding bankruptcy, what you need to do is consider how to fix your credit score after the fact. You can do this through the use of a secured credit card, which you get with a down payment. Over time, using this card and paying it off every month is going to increase your credit score so that you get access to other loans. This can actually put you in a much better position in the future than you would be if you just never used a credit card again.

It’s very important to understand how bankruptcy is going to impact your life and what steps to take. If you’re dealing with that, you need to know about all of your options and what will work best for you.