Believe it or not, at about the time a person obtains a New Jersey bankruptcy discharge, he will likely receive numerous mail solicitations for credit cards. The solicitation proposals are very costly and do not substantially benefit your credit. Such credit cards offer very high charges, with very high interest rates and very low limits.
A secured credit card is a credit card issued by a bank that is connected with a money deposit in the bank. The credit limit on the card is, typically, no more than the amount that must be maintained in the bank account. For example, the bank will require a $1,000.00 deposit, for a credit limit of $1,000.00 or less. The bank will extend credit to someone to whom they would typically not extend credit because they are protected by holding the amount that someone borrows. There is very little risk for the bank.
Typically, the best way to improve your credit score is to establish a secured credit card account. Although the qualifications for a credit card approval is different for each bank, typically all banks will not approve someone for such a card until they have received a bankruptcy discharge. This means that the bankruptcy case must be totally completed before receiving the card. Some banks will approve a person for a secured card immediately after the completion of a case and others require a year after the bankruptcy completion.
After a person continues to make timely payments on the card for some time, his credit will improve. Thereafter, another bank may approve this person for a conventional credit card based on the established timely payments. This process will improve your credit and your ability to obtain future credit.
Robert Manchel is a NJ bankruptcy attorney that is available to answer your questions about how bankruptcy affects your credit, at (866) 503-5655.