Top 4 Unsecured Credit Cards To Apply For After Bankruptcy
The major reason many prefer unsecured credit cards to secured cards is, really, the major difference between the two: the deposit. A secured credit card is secured by the deposit you put down, and, in most cases, that deposit will set your credit limit. An unsecured card requires no deposit but may have more stringent requirements.
One good way to see if you may qualify for a particular card before going through a hard credit pull is to check for pre-qualification offers. Most issuers offer a pre-qualification process that usually involves a soft credit pull and wont affect your credit score.
While being pre-qualified for a specific credit card wont guarantee youll be accepted if you apply, not being pre-qualified can be a sign that you may not meet the cards requirements and should consider waiting before you apply.
Tips For Improving Your Credit With Your New Card
Getting a new credit card is the starting point for improving your credit. Now that you’ve been approved, you must use it responsibly to increase your credit score. Build your score by following these tips:
Make all payments on time
Be sure to make your minimum monthly payment before the due date. Setting up an automatic payment of the minimum due from your bank account ensures you will never miss a payment.
Use the credit card regularly
Keep your balances low
When the amount you owe is low compared to your credit limit, that can increase your credit score. Consider limiting your purchases to only the amount that you can pay in full each month.
Avoid fees and penalties
Whenever the bank charges a fee or penalty, it is that much harder to keep your balances low and pay off your balance each month. Avoid late payment fees, over-the-limit fees and other fees to keep your money in your pocket.
What Types Of Financial Products Can Help Me Rebuild My Credit After Bankruptcy
The most important thing after bankruptcy is taking the right measures to improve your credit history. Only apply for a product when youre confident youll meet the eligibility requirements and can manage the account responsibly. Remember that it could take some time before a lender is willing to approve your credit application after bankruptcy.
Some different types of credit that can help improve your creditworthiness after bankruptcy include:
When using new credit accounts after going through bankruptcy, its essential that you confirm with the lender that it reports your activity to the two credit bureaus: Equifax and TransUnion. On top of that, make sure payments are being made on time and that youre keeping your credit utilization ratio well under 30% to ensure your credit score doesnt get damaged.
You can build your credit as an authorized user on another persons credit card account. As an authorized user, you can use the account freely, but wont be directly responsible for making payments to the lender. The account owner is essentially trusting that youll use the credit card responsibly while you piggyback off of their good credit to build up yours.
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Best Credit Cards To Rebuild Credit In October 2022
*Editorial Note: The content of this article is based on the authors opinions and recommendations alone. It may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.
This article was last updated September 30, 2022 . Terms and conditions may have changed. For the most accurate information, please consult the issuer website.
Have Someone Cosign For A New Credit Card Or Loan
Another idea is to have someone close to you cosign your loan. By making regular payments on the loan, you can nudge your credit score back up and into shape.
Your cosigner may be a relative or very close friend, but he or she should have a good enough credit score to make up for yours. They should also be aware that if you dont pay the loan, their credit score will suffer for it.
If you are unsure of your ability to repay the loan, its probably not worth it to risk dragging someone you care about into the mud with you. Cosigners will work best for those of you with steady incomes, who, if not for a poor credit score, would have little trouble securing and repaying a loan on their own.
How Long After Bankruptcy Can I Have A Credit Card
Once your bankruptcy discharges, you can be eligible for a credit card. You should check your credit score before applying, as it can help you understand the type of realistic options available to you. In many cases, you’ll likely have an easier time receiving approval for a secured credit card. Banks are more willing to extend credit if you provide cash collateral upfront.
Comparing The Best Credit Cards After Bankruptcy: Earning Rate
Of the three cards we’ve chosen, only the Discover it® Secured Credit Card offers users any rewards on their spending.
The Discover it® Secured Credit Card offers users 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter. 1% unlimited cash back on all other purchases – automatically. Discover will also automatically match all the cash back you’ve earned at the end of your first year. These are great benefits considering there is no credit score required to apply, so you can earn rewards on your responsible use of your card all while working to rebuild your credit.
While the other two cards on our list don’t offer any rewards structure, for consumers who have filed bankruptcy, it’s much more important to focus on responsibly rebuilding your credit than on earning rewards, so these cards are good options, too.
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Best Credit Cards After Bankruptcy
Info Icon Circle with letter I in it. Falling within this credit range does not guarantee approval by the issuer. An application must be submitted to the issuer for a potential approval decision. There are different types of credit scores and creditors use a variety of credit scores to make lending decisions.
Balance Transfers: 10.99%, 6 months
Info Icon Circle with letter I in it. 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter. 1% unlimited cash back on all other purchases – automatically
1% – 2% Cashback
Info Icon Circle with letter I in it. Discover will match all the cash back youve earned at the end of your first year.
- Can graduate to an unsecured card
- Minimum deposit amount
How Credit Building Loans Work
You wont get the money you receive from a credit building loan upfront. Instead, you receive it once you complete the installment payments on the loan. So, for example, if you take out a $1,000 loan with a 12-month term, youll receive $1,000 minus the interest charges once you make 12 payments.
Some credit builder loans like Self allow you to earn interest back while you repay the loan. They do this by investing the money in an interest-earning Certificate of Deposit . The interest you earn goes a long way to offset the interest charges on the loan. This means you get more of that $1,000 back at the end of the term.
Selfs secured credit card uses your CD as the deposit
If you decide to get a credit builder loan through Self, you can also get a secured credit card. Self offers an option to get a secured credit card once you have $100 or more in savings progress on your credit builder loan.
This will give you an additional account that you can use to build a positive payment history. In this case, you also get a revolving credit limit, which allows you to maintain a good credit utilization ratio. As long as you pay off any charges in full every month, you can build credit quickly.
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Quick Tips To Effectively Use Credit Cards After Chapter 7 Bankruptcy
The simplest way to include good information in your credit reports each month is to pay your bills on time. And doing so is essential to dispelling the inaccurate information about bankruptcy. And, follow these suggestions while using the best credit cards to rebuild credit after chapter 7 bankruptcy.
Dont spend more: The cost of accruing credit card debt is high, and it puts extra strain on your budget. Additionally, your current objective should be to develop sustainable, responsible payment and spending habits. Therefore, always settle your account in full or refrain from using your card at all.
Create Your Emergency fund: If you have a significant unforeseen expense or interruption in your income, saving money for a rainy day will prevent you from ending yourself back where you started. So, set aside some money each month for this.
Avoid taking cash advances: It is quite expensive to use your credit card to get cash from an ATM because there is a fee and a very high interest rate that begins to accrue immediately away. Therefore, financial advances should only be used in dire circumstances. This is especially true if you have a secured card because paying finance fees to access money that you deposited actually makes no sense.
How Long After Bankruptcy Can I Get A Credit Card
Although its negative impact gradually lessens over time, a bankruptcy will stay on your credit report for seven to 10 years. This means your options will be limited for some time. Exactly how long you’ll need to wait will depend on the type of bankruptcy you file: Chapter 7 or Chapter 13.
|Type of bankruptcy
|After about three months
|It may take three to five years to discharge the bankruptcy. You should consult your attorney and the lender to see if you can apply for a credit card before then.
- Chapter 7 bankruptcy, also known as a liquidation of assets, sells off eligible assets to cover as much of your outstanding debt as possible. The bankruptcy and debts associated with Chapter 7 are typically discharged within three months but remain on your credit report for 10 years from the filing date.
- In a Chapter 13 bankruptcy, also known as an adjustment-of-debt plan, the debtor makes partial payments to creditors as part of a three- to five-year repayment plan. The bankruptcy is discharged after the completion of the plan. A Chapter 13 remains on your credit report for seven years from the filing date.
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Monitor Credit Reports For Accuracy
Everybody should regularly review their credit report, especially after filing for bankruptcy. This is your shot to clear your debts, so if your credit report continues to show discharged accounts as being overdue, your score will suffer more than it should. You may wonder how anybody could overlook something as important as your credit report, but according to a study done by the Federal Trade Commission , one in five people have an error on at least one of their credit reports.
You dont need to pay anything to keep tabs on your credit report. Youre entitled by law to a free, yearly credit report from each of the major credit bureaus: Experian, Equifax and, TransUnion.
Here are some things to look for to ensure your credit report is accurate:
- Accurate personal information
To report errors on your credit report, contact the credit bureau, and file an official dispute.
Correcting Errors On Transunion:
- Name of the company you have a dispute with
- Account number, if available, of the disputed item
- Reason for your dispute
- Documentation to support the amendment you have requested. If the amendments are to your personal information , please provide supporting identification documentation, such as change of name certificate, marriage certificate, etc.
If you are still not satisfied that your file is correct:
The Personal Information Protection and Electronic Documents Act also sets out ground rules for how private sector organizations can collect, use or disclose personal information in the course of commercial activities.
Under Personal Information Protection and Electronic Documents Act PIPEDA individuals have a right to see the personal information that a business holds about them, to correct any inaccuracies and to lodge a complaint with the Privacy Commissioner of Canada if they are unhappy with how an organization is handling their information.
Please note: If the incorrect information comes from a federally regulated financial institution, the Financial Consumer Agency of Canada website provides additional information on how to get errors corrected.
When you have completed this step you can go on to step 3
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Weighing Up Your Options
If possible, it’s best to weigh up your options prior to declaring bankruptcy. There are several different avenues that are worth exploring, including consolidating your debts accessing financial counselling, debt negotiation and financial hardship relief. Although not all options will suit every situation, undertaking some research before making a final decision is an important step to take as bankruptcy will continue to affect your life for several years after the initial period ends. Bankruptcy can have serious impacts on your finances, your employment and your ability to access credit.
What Is A Good Credit Score
So, what is a good credit score, anyway? In Canada, its generally anything over 700.
It wont surprise you to hear that it does get more complicated than that. But if your score is above 700, then youre in reasonably good shape. Credit scores in Canada generally range from 300 to 900, and the jump from a fair score to a good score is right around that 700 mark, depending on company that does the scoring and the bank thats using the score.
Now, lets taking a closer look at how credit scores work and why theyre important.
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Is The My Jewelers Club Card Good For Building Credit After Bankruptcy
Bankruptcies seriously impact your credit score, and rebuilding is difficult if you can’t qualify for a credit card. Luckily with The My Jewelry Club Card, you can get approved even with bad credit. The best way to boost your score? Disputing a bankruptcy with the help of a credit expert is the fastest way to remove it from your credit report.
Best For Balance Transfers: Unity Visa Secured Credit Card
This card charges a $39 annual fee, yet you can qualify for an initial credit limit starting at $250 and your payments will be reported to all three credit bureaus. What makes this card stand out is its ongoing interest rate and introductory balance transfer offer, which could be a lifesaver if you need to escape high interest debt.
Once you get approved for the UNITY® Visa Secured Credit Card, youll qualify for a fixed APR of 17.99 percent on purchases. However, balance transfers qualify for an introductory APR of 9.95 percent for six months, followed by the standard fixed interest rate of 17.99 percent. Note that a 3 percent balance transfer fee applies.
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Obtaining A Bankruptcy Discharge
A bankruptcy discharge is the goal of the bankruptcy process and is the actual legal order that says you are no longer obligated to pay any discharged debts. Once discharged, creditors holding a debt may no longer attempt to collect on that debt, either by mail, phone, or in person.
Each debt being considered for discharge has a fixed time during which a complaint objecting to the discharge may be filed. If there is no litigation objecting to the discharge, debtors will generally receive a discharge automatically.
Once You Receive Your New Card
After you receive your new card, pay it off in full each month, if possible, or at the very least, make the minimum payment. This gets reported to the credit bureau and will help establish a positive credit report that will begin to increase your overall credit score. If you are late with a payment or miss a payment altogether, however, that will also be reported to the credit bureau and will negatively affect your credit score.
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How Do I Make My Deposit
You can set up a payment to deduct from your checking or savings account. Some card issuers also allow you to make installment payments to satisfy the deposit requirement, provided you make all payments within the timeframe they impose. Once you make your deposit in full, your provider mails your credit card.
Opensky Secured Visa Credit Card: Best For Easy Approval
The OpenSky® Secured Visa® Credit Card, unlike the other cards here, stands apart for not requiring a credit check to be approved. That means youll likely have a higher chance of qualifying because your poor credit scores wont hold you back.
You also wont need a bank account to provide the security deposit. Instead, you can pay by debit card, money order, certified check, or Western Union.
But that easy accessibility comes with some caveats. This card has an annual fee, no credit monitoring features and no rewards or benefits. It also has some reports of poor customer service and slow processing. But, if youre working with bad credit and havent been able to qualify for the secured cards mentioned above, OpenSky may be worth a shot.
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