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The major downside of filing for bankruptcy is that it can hurt your credit score. This makes it harder to obtain refinancing, take out loans or start a business in the future. Because bankruptcy can leave a mark on your credit for the next ten years, you might be afraid to pursue it.

Luckily, there are ways for you to rebuild your credit post-bankruptcy. You can even have another credit card or loan, as long as you have a plan to spend responsibly to avoid another debt problem. These options can come with limitations, but they may allow you to improve your credit.

Secured credit cards

Unlike a normal credit card, a secured card requires you to pay a fee for debt “insurance” so that the company doesn’t take a huge risk on someone with low credit. Once you terminate the secured card, you will get this deposit back if you paid each bill on time. Eventually, you might be able to earn a regular card, which usually has a higher maximum limit.

You should only use a secured card to slowly build credit as opposed to using it for all of your purchases. Relying too much on this card can put you in an even worse credit situation than before bankruptcy.

Because there are several credit-building methods available to people who have filed bankruptcy, we will discuss additional options in future posts. In the meantime, you can learn more about how bankruptcy affects your individual credit by consulting with a knowledgeable attorney.