While this may sound like a good plan, most people don’t have any extra income to pay down their debts. Many people have found that declaring bankruptcy is a better way to get out of debt. Unfortunately, when your bankruptcy is over, you’ll need to start from the beginning with credit repair.

Starting over will require a similar mentality as the snowball debt repayment method in that you’ll need to start small. One of the best ways to engage in this credit repair is to obtain a secured credit card. You’ll find that this is an affordable way of building your credit.

Use a Secured Credit Card to Build Your Credit

While most of us don’t see credit cards as loans, this is how credit card companies view them. This view stems from the fact that when you use your credit card to buy something, you’re borrowing money from the credit card company. Just like a loan, you’re charged interest, and the longer you take to pay it back, the more interest you’re charged.

With a secured credit card, you’ll be required to pay the credit card company an amount equal to the card’s credit limit. Typically this is $200. Once paid, you can make purchases of up to this amount and then pay as much as you can each billing cycle. If you fall behind, the credit card company will keep your $200. In this way, you can think of a secured credit card in the same way as you think of a car loan: When you fall too far behind, the bank will repossess your car or, in this case, your $200.

By paying off your balance for numerous consecutive months, you’ll have your deposit returned to you by the card company. The company will then convert your secured credit card to an unsecured credit card (a standard credit card). As you continue to pay off the card’s balance, you’ll gradually have your credit limit increased.

While it’ll take some time before you’ll have enough credit to make big purchases, at least you’ll have a credit card for small purchases. This method is also excellent for credit repair.

Moving Towards Credit Repair

All of this information may come as a surprise for you. You may have thought that once you filed for bankruptcy, you’d never be able to buy anything on credit again. At Super Credit Repair in Pinellas County, FL, we’re here to help you rebuild your credit once the process is over.

Many people have depended on us to help them get a fresh start with their finances. We’ve helped them develop a comprehensive plan that’s got them back on their feet. Call us today to get started working towards your financial freedom too.

Picture Credit: Freepik

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