Contrary to public perception, declaring bankruptcy does not necessarily mean the end of a good credit history. While records of a bankruptcy will remain in credit histories for a substantial period of time, seven years to be exact, American cardholders can still find good credit cards. Most experts would say that a bankruptcy can be a red flag or a potent warning for financial firms to stay clear of consumers. However, new studies suggest a shift in industry practices.
According to several financial experts, banks and card companies are opening up to the idea of issuing credit cards to consumers who have declared bankruptcy in the recent past. While the logic may not immediately register with many Americans, analysts say that card companies are continuously changing their policies, especially with mounting losses. They explain that card issuers are becoming more cautious and are more selective of their potential clients.
Many card firms are taking the risk and offering some of their best cards and terms to people who have declared bankruptcy. Industry experts say that these card companies realize that these cardholders are more likely to stay clear of any bad financial decisions. This means that these clients would be more diligent in paying off their balances and avoiding late payments because of their experience with financial difficulties.
However, financial specialists point out that cardholders need to regain the trust of their card issuers. Consumers who have had run-ins with bankruptcy must learn to manage their finances better. Experts say that bankruptcies offer many troubled Americans a second chance to regain their footing and come out stronger. They point out that because of this opportunity, cardholders must avoid repeating their past mistakes. Any extra income should be managed wisely and used to pay off existing credit debt. Cardholders should also make payments on time to avoid incurring hefty penalties that would only add to their financial problems.
Analysts also warn against card companies that prey on Americans who have recently filed for or declared bankruptcy. Experts say that some card issuers actually offer teaser and promotional rates to entice consumers into signing up with them. Doing so, however, can mean skyrocketing interest rates and unfair policies. The logic behind this, experts say, is that recently bankrupt cardholders are more willing to sign up for any card because of the mistaken perception that no card companies would offer them their services.