4 Tips for Getting a Credit Card After Bankruptcy
Sometimes, bankruptcy can completely prevent you from getting a credit card, at least without permission. If you have a Ch. 13 payment plan, for example, you’ll need to ask the trustee before incurring any new debt. Other times, it’s just a matter of choosing the right card from the right issuer. The following tips will help you navigate the process.
- Check Your Credit Score & Report – Knowing your starting score will help you set your credit card expectations. It will also give you a benchmark against which to measure credit improvement. And reviewing your credit reports will give you the chance to identify errors unrelated to your bankruptcy that may be contributing to your credit score damage. You can check your latest credit score and TransUnion credit report for free on WalletHub. WalletHub is the only site with free scores and reports that are updated daily.
- Start with Secured Cards. Secured credit cards offer the highest approval odds because they prevent you from spending more than you can afford to repay. They do so by requiring a refundable security deposit and making your spending limit equal to what you put down. That means there’s less risk for issuers. But the best part is, secured credit cards are just as good for rebuilding credit as unsecured cards. They’re also a whole lot cheaper.
- Search the Fine Print – Most credit cards don’t advertise their stance on bankruptcy, so you’ll have to do a bit of digging. If you’re comparing credit card offers online, navigate to a card’s terms and conditions page, and search for the word “bankruptcy.” The best method is to use the “CTRL + f” (PC) or “Command + f” (Mac) function. This will allow you to review every mention of the word to see if there are any restrictions you need to know about.
- Look for Cards with No Annual Fee – When comparing credit cards after bankruptcy, your top priorities should be getting approved and paying as little as possible in fees. This will enable you to rebuild your credit as quickly and inexpensively as possible. And that will lead to a lot of savings and even better credit card offers.
With this guidance in mind, you may want to take another look over the bankruptcy credit cards discussed above. For your convenience, we’ll summarize how they compare in some key categories.
2018's Best Credit Cards After Bankruptcy:
The best credit card after bankruptcy is the OpenSky® Secured Visa® Credit Card
because there’s no credit check when you apply. OpenSky’s main approval requirement is that your income exceeds your expenses. The OpenSky® Secured Visa® isn’t too expensive, either, with a $35 annual fee and a $200 minimum security deposit. That deposit is fully refundable, and it will help you avoid spending more than you can afford to repay as you repair your credit standing.
But it’s important to remember that finding the best post-bankruptcy credit card for your needs is only half the battle. You must also use it wisely to benefit. Below, you’ll find some advice on how to rebuild the right way
5 Pointers for Using Credit Cards After Bankruptcy
- Always Pay on Time. Paying your bill on time is the easiest way to add positive information to your credit reports each month. And that’s critical to overcoming the negative info from bankruptcy. Missing due dates, on the other hand, is the quickest way to show lenders you aren’t trustworthy. Check out WalletHub’s on-time payment tips for some specific ideas on how to stay on the right side of this issue.
- Don’t Spend More Than You Can Afford. Racking up credit card dept is expensive and puts unnecessary pressure on your finances. Besides, your goal at this point should be to adopt sustainable, responsible spending and payment habits. So always pay your bill in full or don’t actually use your card at all. Just having a credit card that’s in good standing benefits your credit.
- Build an Emergency Fund. Setting some money aside for a rainy day will help you avoid winding up right back where you started if you get hit with a major unexpected expense or income disruption. So save a bit every month for this purpose.
- Don’t Do Cash Advances. Using your credit card to withdraw cash from an ATM is extremely costly, thanks to both a fee and a very high interest rate that starts accruing right away. So cash advances should be reserved for emergencies only. This is especially true if you have a secured card, as there’s really no sense in paying finance charges to access cash that you deposited.
- Monitor Your Credit Score. Signing up for free 24/7 credit monitoring will get you alerts for important changes to your credit report. This will enable you to react quickly to errors and signs of fraud. Keeping an eye on your credit score will give you a sense of when you’re ready to apply for a credit card upgrade.
For more advice, check out WalletHub’s guides on how to rebuild damaged credit
and how long you can expect the process to take
Ask the Experts: Bankruptcy & Credit Cards
To help you make the right moves for your finances, WalletHub posed the following questions about using credit cards before, during and after bankruptcy to a panel of experts. You can find their bios and advice below.
- What happens to a credit card that you get soon before filing bankruptcy?
- Can you get a credit card during bankruptcy? Is there a difference between Ch. 7 and Ch. 13?
- How do your credit card options change after bankruptcy proceedings are complete?
- Is there a difference between secured and unsecured credit cards when it comes to bankruptcy?
- Can you keep a credit card during bankruptcy if it doesn’t have a balance when you file?