Which Credit-Building Products To Try After Bankruptcy Discharge in Henderson

Most people have learned the lesson at least once in life that there is no low that some will avoid when swindling others for cash. That might be how you found yourself reading articles on a bankruptcy firm’s website. It might seem like groups known for financial struggles- such as recent bankruptcy debtors- might be safe from scammers and unscrupulous financial agencies. But these are the types of people who know just how important it is to some recent bankruptcy debtors to rebuild their credit after erasing their obligations through a debt discharge. They take advantage of this by offering scammy products and services that do nothing to improve their customers’ situations, and oftentimes make them worse. If a bankruptcy debtor wants to make the most of their filing by rebuilding credit after discharge, they should learn about which credit-building products to use and which to avoid. Read on for more on this subject, especially as it applies to Nevada residents seeking debt relief. To discuss it as it pertains to your personal situation, schedule your free consultation with a member of our Henderson bankruptcy firm today at 702-899-3328 for more info.

Should I Try a Secured Credit Card?

Regular, or unsecured, credit cards lead many debtors to file for bankruptcy. If an individual continues to submit applications for new credit cards, they can accrue almost limitless amounts of unsecured debt that comes with high interest rates. For someone who struggles with overspending on credit cards, right after a bankruptcy discharge can be a particularly risky time. Credit card companies will flood debtors with offers once their cases have been discharged. Not all of these offers will be good ones, and credit inquiries and poor credit management can hurt a debtor’s already-weak credit. They also won’t be able to file for bankruptcy again to address the issue for a certain number of years. If you want to avoid the cycle of credit card debt, you may instead consider a secured credit card.

There are numerous banks and financial organizations that offer secured credit cards, even to recent bankruptcy debtors. To open a secured credit card, the user will typically be required to pay a cash deposit that is equal to their credit limit. The credit card is secured to that deposit, which can be used as payment if the user fails to make their monthly payments in a timely manner. So secured credit cards aren’t entirely risk-free, and often have higher interest rates than unsecured credit cards. A high interest rate isn’t relevant if the debtor pays their balance in full each month. Opt for a low-limit card with as low an interest rate as you can find, and pay it off each month to build your credit after bankruptcy discharge with as little risk as possible.

Should I Join a Lending Circle?

You may not be interested in endless applications and credit checks after just devoting so much time and energy to your finances in bankruptcy. If so, you should consider any opportunities presented to you to join a lending circle, especially if that lending circle includes credit reporting to help boost your score.

In a lending circle, members contribute a set amount each month to a community pot. Each lending circle has its own rules for the distribution of funds in the community pot. It could be on an as-needed basis, with members making claims for distribution when they experience financial emergencies or deadlines. Others might schedule when each member will receive their share. Either way, each member should receive back what they put into it at some point during the lending circle cycle. But if you participate in a casual lending circle with relatives or acquaintances, you might not receive credit-building benefits. There are non-profit organizations that allow users to participate in lending circles while receiving the benefits of reporting to the three main credit bureaus. This could be a great opportunity if you can find a credit reporting lending circle with distributions that meet your needs.

Should I Take Out a Credit-Builder Loan?

Recent bankruptcy debtors won’t be approved for all lines of credit, and are even disqualified from certain loans, like home mortgages, for a set time period after discharge. Credit-builder loans allow these types of high-risk applicants to establish credit in a safer way. With a credit-builder loan, the bank opens a certificate of deposit, or CD, on the customer’s behalf. Once they have completed making payments on the loan, they will be given access to funds in the CD. This helps the customer establish a history of making payments on time, which can be crucial in the time period right after a bankruptcy discharge. On the flip side, if you fail to make your payments, it will hurt your post-bankruptcy credit score. And you could be put in a negative situation if you need access to the funds sooner than the set term. Depending on your situation, the trade-off of easier loan qualification may not be worth it, and you should attempt another method of credit rebuilding after bankruptcy discharge.

Should I Ask Someone to Add Me as an Authorized User to Their Credit Card?

If you want to rebuild credit without the damage of hard credit inquiries and possible rejection by banks, you could ask someone you trust to add you as an authorized user to one of their credit cards. They will also have to trust you to do you this favor, and some could be reluctant due to your recent bankruptcy filing. You may need to agree on how much you can spend on this person’s account, or not to spend at all, and simply reap the credit-building benefits of being named on their account. If they make their payments on time, it will slowly boost your post-bankruptcy credit score. On the other hand, if they make late payments, it can hurt your score during a time when you need to be focused on financial growth and health. This method is only feasible if you have someone you know who is financially responsible and who is willing to add you to an account.

Affordable and Reliable Bankruptcy Representation in Henderson, Nevada

If you haven’t already filed for bankruptcy, it may be premature to start thinking about how you will rebuild credit after your debts have been discharged. But while bankruptcy is a process that should be taken step-by-step, it’s also important to be prepared for what comes next, whether you file for chapter 7 bankruptcy or chapter 13 bankruptcy. Certain credit-building products are safer than others, especially for someone who doesn’t want to lock up their funds in credit-reported savings during a financially vulnerable time. Making smart choices while re-establishing credit can be key to getting the most out of bankruptcy. Want guidance in the chapter 7 or chapter 13 bankruptcy process from start to finish? Seeking quality representation in the Henderson area with payment options that you can afford? Our Henderson Bankruptcy Lawyers offers Zero Down payment plans and free consultations by phone to make getting started easy. Get scheduled today by calling 702-899-3328.