Illinois residents who have gone through bankruptcy may wonder how it will affect their ability to get a credit card. While it may take some time to build up trust again, lending institutions and banks may be willing to provide credit.
There are several things that affect a debtor's ability to secure credit. One is the time interval since the bankruptcy occurred. The longer it has been, the better a chance a debtor will have. Another is the individual's FICO score, which ranges from 300 to 850. While bankruptcy has a negative effect on a credit score, it is also affected by credit mishaps in the past such as charge-offs and late payments. Obtaining a FICO score from one or all three credit bureaus helps in knowing one's credit status. Credit lenders may feel that bankruptcy that discharges debt frees income to take on new credit.
Lenders have a vast array of cards, ranging from those for individuals with top credit ratings to others that are geared toward challenged borrowers. Some cards are secured by a deposit that is held in reserve to cover charges. Paying on time assures that charges will not be paid out of the deposit. Making timely payments for a period of at least one year may result in improved credit scores. While a Chapter 7 bankruptcy appears on credit reports for up to 10 years, the effect it has on an individual's ability to borrow may gradually decrease.
Credit card and medical debt may be impossible to pay. Some individuals may benefit from filing for Chapter 7 bankruptcy, which allows for some unsecured debt to be discharged. An attorney may offer guidance into whether it is a viable alternative for a client and can suggest other available forms of debt relief.
Source: FOX Business, " Credit Card Life After Bankruptcy", Erica Sandberg, August 21, 2014
Source: FOX Business, " Credit Card Life After Bankruptcy", Erica Sandberg, August 21, 2014