How to Reestablish Credit with No Disposable Income - Westgate Law

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How to Reestablish Credit with No Disposable Income

There are those who talk about the increased strictures that been put in place on credit in today’s market, but even after it became a lot “harder” to get credit…it’s still pretty easy. There are always companies willing to offer credit opportunities, even to those with little to no income. They’ll offer credit based on percentages. Individuals targeted by this type of credit are classified as “high risk” by lenders and are likely to default. The debts are then discharged and the lender will continue to offer credit to other high-risk borrowers. If you are on a fixed income without disposable income, taking advantage of this type of credit offer can be advantageous as one of the only methods open to you for reestablishing your credit after bankruptcy.

If you are on a fixed income and you want to attempt to rebuild your credit with a high rate credit card with undesirable terms, there are a few things you need to approach with caution. Individuals on a fixed income often can’t afford to make a monthly credit card payment. That’s why the statistical chances of chances of default are so high.

Despite the difficulties associated with reestablishing your credit when on a fixed income, the need to do so is undeniable. It can be very important for future job prospects as bad credit can negatively affect your chances during the job application process. All attempts should be made so that prospective employers can see that your bad credit is improving.

Tips for Rebuilding Credit Post-Bankruptcy on a Fixed Income:

Limit your attempts to reestablish credit – be cautious.

Don’t make large purchases impulsively – don’t purchase a new car in an attempt to repair your credit.

Start with a couple secured credit cards with low credit limits.

*Secured cards require you to provide a deposit equal to the “credit line” on the account.

While saving up money in order to deposit it towards the use of a secured credit card may take some time on a fixed income, you’ll find that it is the most effective way to rebuild your credit post-bankruptcy on a fixed income. For many it’s the only viable option. Taking the time to save up this type of money is the better option. The only other type of credit generally offered in this situation will come with fees up to 50% of the initial “credit limit.” For example, you could get a credit card with a $500 credit limit with $200 in initial fees. If you are completely unable to save up the money necessary for the first scenario, the second could be your only option.

Regardless of which method you decide to use, make sure to check with the lender of your choice to ensure that they notify all three major credit reporting companies of your positive credit activity. If you need additional information on how to improve your credit score post-bankruptcy while living on a fixed income, get in touch with the southern California bankruptcy experts today at Westgate Law.

About the Author

Justin Harelik

Justin has a singular goal: to get people out of financial distress and move them to financial stability and prosperity. He does this by combining 15 years of in-depth experience in bankruptcy, credit management, debt negotiation and student loan modifications, and he does it with both English and Spanish-speaking clients.

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