Financial Planning for Generation X & Y Women
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Expert Q&A Archive

Should I use a credit card to rebuild credit after filing bankruptcy?
In late 2006, I filed a Chapter 7 bankruptcy. It was discharged in early '07. Since that time I have not been using a credit card at all. I don't have any now. In order to build back a credit standing, would it be okay to get a credit card? Would it be wise as long as I can pay it off at the end of the month?

Delores Lenzy - Jones, CPA, CIA:
expert info »
Yes, I recommend you get a credit card; however, do make timely payments such that you can re-establish your good credit. It's best to pay off the balance by month-end so the balance does not build up.
Connie K. Marmet:
expert info »
Re-establishing credit after bankruptcy is an important step. Cards vary in their terms. Several years ago a friend who had declared bankruptcy needed a credit card to cover travel expense for his job. He got one from Capitol One where he had to deposit $2000 cash for which he received no interest but was able to get a credit card. After a set period of time and an excellent repayment history, the deposit was released. I don't believe there was a monthly charge. I would encourage you to shop around for the best terms.
Joan Koonce, Ph.D:
expert info »
Getting a credit card to rebuild your credit is fine as long as you can manage it without getting over-indebted. Because you have filed bankruptcy, you may not get a credit card with the best interest rate, but as long as you pay it off each month, you will not have to worry about paying interest charges. Also, you may not get a very high credit limit initially. If you pay on time over a period of time, the company will probably raise the credit limit. Some cards may also have annual fees, so pay attention to this or other costs when shopping for a card.