Credit damage. We all fear it, especially when debts become overwhelming and finances are tight. Although credit worries are something most people are concerned about in bankruptcy, the truth is that the bulk of credit damage is done long before anyone files for bankruptcy.
Missed payments and delinquent account standings are the biggest culprit to damaged credit. There really is no direct credit damage that results from filing for bankruptcy. In fact, many people see an improvement in their credit after a debt discharge and everyone exiting bankruptcy is given a fresh start at rebuilding their credit. Although securing future credit can be more challenging after a bankruptcy, it is far from impossible. The trick is knowing the best plan of action.
When looking to get new credit after bankruptcy many people jump into the first credit offer than comes along. This is a mistake. There are often plenty of options just around the corner. Secured lines of credit may boost credit repair faster than unsecured debts, but they will come at a cost. High interest rates and steep default consequences are common with post-bankruptcy secured credit lines. Finding a low interest rate on an unsecured line of credit and maintaining a manageable balance for six to twelve months post bankruptcy is a great way to establish a positive credit history. Once some time has passed, obtaining a secured line of credit with more manageable terms will be possible.