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How can you avoid debt after bankruptcy?

On Behalf of | Aug 20, 2021 | Firm News

After completing your bankruptcy, it may feel like a giant weight lifted off of you. Over time, your credit score will grow again and you can apply for credit cards again. To have a credit card does have its benefits. Not only can you receive awards for keeping a credit card, but it can help you rebuild your credit portfolio.

However, when you open new credit card accounts, you have to be careful. Experian explains irresponsible credit usage can get you into trouble.

Keep your balances low

Do not overuse your credit cards. If you have money available, you may think it better to spend it, but this is not the case. In fact, if you use too much of your overall balance, it can damage your credit score. Likewise, it can become overwhelming to pay the cards off.

Try to only use your credit card for necessary purchases. You should have the money available to pay off your credit card every month.

Do not close accounts

If you open a credit card account and decide you do not want it, you should not close the account. When you close the account, you can hurt your credit score. All of your credit lines appear in your overall utilization ratio. If you close an account, your utilization spikes and can damage your credit.

Pay more than necessary

It is always tempting to pay the minimum amount, but it could take years to pay off a credit card if you do this. Try to budget to pay more than the minimum amount every month. Then, make sure you pay on time.

Late fees can damage your ability to pay and your credit score.