Monday, December 10, 2012

A Cash Advance Can Help After Bankruptcy, But It Won't Rebuild Credit

When you are trying to recover from bankruptcy, a cash advance is still an available option. Those short-term - no credit check loans are not interested in what the credit bureau reports. Don't fret; credit recovery also consists of other options.

For starters, neither of these loans will rebuild your credit. Only debt which is reported to the credit bureau will be used to help rebuild credit. The only time one of these short-term loans gets reported to the bureaus is after it has been sold to a collections agency. Bad debt will not rebuild anything.

Any loans which were not part of the bankruptcy should continue to be paid efficiently. As long as payments are on it and the bureau gets reports of the borrower managing this debt well, it will have a positive reflection on a credit report.

Credit cards will help. Managing any new credit cards properly, meaning on-time payments and keeping balances low will slowly work at rebuilding credit. Credit cards are no longer difficult to obtain after a bankruptcy. There are secured balances in which money must be sent in to cover as collateral. If for some chance your debt goes into default, the creditor will use this money on hold to pay off your debt.

Other creditors may offer you low limits with high interest. These cards are still a good option for those looking to rebuild. Use the cards sparingly each month in order to show usage, but minimally enough to afford full payoff at the end of the month. High interest will only come into play if the balance is carried over to the next month. Use these cards selectively to show effective money management.

In order to show proper money management, keep your debt limited to the essentials. You may have a home or car loan which will reflect well, but accruing new large amounts of credit card debt will not help. No matter how efficient you are with making on-time payments, if the debt rebuilds too quickly, creditors will look sour to any new application. There are some definite no-no's when trying to come out of bankruptcy.

*Keep any current debt a positive

*Apply for new credit slowly ( too many applications in a short period of time will red flag your credit as desperate)

*Keep new credit paid off each month

*Don't be late with anything

*If you need a cash advance, pay it off to avoid bad reports from collections agencies

*Build up a savings account to be used for emergencies.

Anytime you can rely on your own income to manage financial emergencies, the better off your finances will be. Recovering from bankruptcy is a process. If you can show that you can manage whatever debt did not go through or new debt obtained afterward, your score will build faster than waiting to try something new. Do your best to keep any spending problem from reoccurring and keep the debt paid off each month in case a new emergency comes and your income needs to go elsewhere. Online cash advances can help, but make sure the payoff amount will be available in a few short weeks so nothing negative will prevent this option from helping future emergencies.

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