The content is accurate at the time of publication and is subject to change.
More and more people have filed for bankruptcy by the end of 2010, they have either filed Chapter 13 or Chapter 7 for bankruptcy protection, and this is the highest since the year 2005 and the reasons are plenty. The main reason being unemployment or underemployment, and most people are relying on these credit cards to meet their very basic requirements and expenses. In such a scenario, it does not come as a surprise that more and more people are filing for bankruptcy and are trying to make a fresh economic beginning. The trouble however begins only after the bankruptcy filing is completed. It is then that the negatives begin to surface and consumers are left with the daunting task of rebuilding their credit from scratch. Thankfully these customers have something to rely on. Low-limit cards are a benefit for these customers and it would help in giving their credit scores a boost.
There is a lot of damage done to the credit scores while filing for bankruptcy. While most of the debts may get wiped out at least 100 points gets wiped off from the consumer`s scores and it will continue to show up for the next 7 to 10 years on the credit report and this would depend on the type of bankruptcy that was filed. When the credit scores are not up to the mark consumers will have to struggle to avail personal, auto, or mortgage loans. And in case they do qualify for loans by default, they will be faced with interest rates that are sky high as these consumers are considered high risk. However, there are many credit cards that are now available with low limits and these are ideal for consumers to rebuild their credit scores that are weak.
The first thing to do while rebuilding the credit score is to pay up the monthly bills on time and without any delay. The second thing is not to rack up huge credit card bills again. This is a good way to show lenders that the consumers are responsible and careful with their spending habits and they have learnt their lessons well. This will help reestablish the faith in the customers as they have handled their credit in a responsible manner, used cash wherever possible etc. These low limit cards are mostly for these customers and come with high interest rates.