Do credit cards cause bankruptcy or help your credit score?

Public perceptions about credit cards tend to vary pretty widely. Some people claim that they’re dangerous and they cause bankruptcy. Others, though, say that they’re necessary as a great way to improve your credit score.

So which one is it? These conflicting views can lead to many mistakes, such as people with low credit refusing to use cards because they’re afraid of debt or people with too much debt using cards unwisely because they think the cards will help.

Both viewpoints are equally valid

Credit card debt is a complex topic because both the positive and negative views about them are actually true at the same time. Credit card debt is one of the leading causes of bankruptcy. A big reason for this is that high interest rates mean that those without the ability to pay off the balance just see their debt compounded massively, and it can spiral out of control.

At the same time, though, people who have already used bankruptcy will see a drop in their credit score. To build it back up, they have to show lenders that they will make payments on time and that they can handle that debt. A great way to do this is by using secured credit cards, which are backed up by a deposit, to increase your score to a healthy level again.

Are you considering bankruptcy?

If you’re looking into these issues, you may be considering bankruptcy or trying to determine what you should do about your debt. Make sure you are well aware of all of the legal options that you have as you seek out that fresh start financially.

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