Fort McMurray residents recovering from a bad credit event like bankruptcy should do what they can to repair their credit. The question they face is: what is the best way to do so?  A good first step is opening two new lines of credit and then being careful in how you use them. The simplest way to do that is to open two secured credit cards.  Why secured credit cards? Because you aren’t going to qualify for much else after a bad credit event. However, you do have choices regarding where you can get them and how you leverage it.  

Can you ask your bank for a secured credit card? 

We’ll say this is a good place to start. Not all banks offer secured credit cards. Most of the institutions that do have them market them to young adults who have no credit history, not adults with bad credit. However, they can be convinced to offer it to you. The solution is to offer collateral, money that backs the credit card in case you don’t pay. If they approve the request, that financial reserve will be kept in a GIC or term deposit.  

Why do we recommend a secured credit card?  

You may be left with a few lines of credit after your bankruptcy or another bad credit event. This may be a car loan, mortgage or phone on payments. While paying those bills on time will prevent worse damage to the credit report, it won’t do much to heal the credit report. Getting a new secured credit card starts a new account. As you pay that bill in full and on time, your credit will improve much faster. More importantly, it shows that you can manage new debts. 

We recommend two unsecured credit cards for several reasons. First, it creates more than one line of credit, improving your credit score. However, it isn’t so many accounts that it raises red flags with lenders. Nor are you likely to lose track of the accounts and miss a payment, something that will hurt your credit.  

As time goes by, the lender may raise your credit limit. They’ll eventually convert it into an unsecured line of credit and return your deposit to you. That looks good on your credit report. And you should end up with a several thousand dollar credit limit that a Fort McMurray mortgage company or auto lender will take seriously. Conversely, no mortgage lender is going to consider a $300 prepaid credit card as proof you can be trusted to pay a $300,000 home loan.  

How to Speed Up This Process  

The credit account may not be increased automatically. The solution here is to ask for them to increase the limit. Note that you may have to add money to the account, such as when it is in a dollar for dollar arrangement. The biggest reason to do this is that the credit card will eventually be reported as having the large credit limit for its entire history.  

Be careful with your credit ratio. Try not to use more than thirty percent of the credit you’re granted.  

Never use the money you just deposited in the account, in case the card limit isn’t increased fast enough. You can’t afford to over-charge the account.  

Use the card frequently so that the lender wants your business. Don’t exceed your credit limit, since that will hurt your credit.  

Check the account balance regularly. This helps ensure that you don’t go over the credit limit, and it gives you the opportunity to make payments toward what you owe.