Can I Get An Unsecured Card For After Bankruptcy With No Annual Fee
Some of the cards in this review offer a range of annual fees that start at $0. However, a past bankruptcy may put a no-annual-fee card out of reach. While its not impossible to get a no-annual-fee card despite a prior bankruptcy, unusual conditions would have to prevail.
Naturally, bankruptcies that are old enough to have been removed from your credit reports can no longer hurt your ability as a debtor to get a credit card without an annual fee. It takes seven years for a Chapter 13 bankruptcy to roll off your credit report, but it takes a full 10 years before a Chapter 7 bankruptcy disappears.
This is due to the differences between the two bankruptcy chapters. Chapter 13 involves a structured repayment plan to pay back some debt to unsecured creditors, and therefore is considered less damaging than Chapter 7 bankruptcy discharge, where your debts are completely forgiven by each creditor.
If your bankruptcy is still on your credit report but is due to come down soon, you may be able to find an unsecured card that will give you a $0 annual fee. For this to happen, you would have had to work hard during the intervening period to improve your credit.
In other words, by compiling a history of creditworthy behavior over the last five or more years, you may be deemed eligible for a no-annual-fee card, or at least a low-fee card, despite an old bankruptcy.
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.
The Costs Of Bad Credit
There are other costs, too. Even though theyre not designed as such, credit scores have come to be interpreted as a general measure of reliability. Employers, landlords, insurers, cell-phone providers, utility companies and others use them to evaluate customers or applicants.
A NerdWallet survey found that many people are unaware of these effects. Significant numbers of Americans didnt know that bad credit could prevent them from renting an apartment , raise their car insurance costs , limit their options for cell-phone service or force them to provide security deposits for utility service . Further, 1 in 5 respondents thought a score of 600 which is bad credit was enough to qualify for any credit card.
If you have bad credit, or no credit, a card designed specifically for someone like you is usually the quickest and easiest way to build credit.
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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
Regular APR
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.
Cashback Match
- Can graduate to an unsecured card
- Minimum deposit amount
Intro APR
Intro APR
How Soon After Filing Bankruptcy Can You Get A Credit Card
You can apply for a credit card after your bankruptcy is discharged . If proceedings are still in progress, then you need the approval of the bankruptcy court to apply for a card.
The amount of time you need to wait will depend on the type of bankruptcy you filed. Here’s how long it usually takes before you can apply for a credit card after Chapter 7 and Chapter 13 bankruptcy:
| Type of bankruptcy |
|---|
| 3-5 years |
A Chapter 7 bankruptcy requires bankruptcy filers to liquidate assets, and it’s a relatively short process. Once you’ve sold the assets you’re required to sell, any debts that couldn’t be repaid will be discharged. This type of bankruptcy generally takes three to six months to discharge after the bankruptcy filing.
A Chapter 13 bankruptcy discharge takes much longer because it requires the debtor to follow a three- to five-year repayment plan. You can only apply for a credit card during a Chapter 13 repayment plan if you have the approval of the trustee. Even if you do, the credit card company may deny your application since you’re still in the bankruptcy process.
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How Do I Get An Unsecured Card After Bankruptcy
Most of these cards offer a prequalification step before you formally apply for the card. The good thing is that it wont hurt your credit score.
In a prequalification process, the credit card company makes a soft pull of your credit information from any of the three credit bureaus. A soft pull is an inquiry about your credit history that will not count against you.
When you apply for a card after passing the prequalification step, the credit card company does a hard pull, which can temporarily reduce your credit score. Too many hard pulls in a short time period can hurt your score further.
The prequalification step requires you to submit basic information about yourself, your income, your Social Security number, and other data. You must be at least 18 years old and not have certain derogatory marks, such as previously defaulting on the card for which you are applying.
The card application will consist of further questions about your living arrangements, your job, existing unsecured debt, credit utilization, and other nosy items. Typically, the harder step is to prequalify, but not all prequalified applicants are approved.
While the cards in this review will not necessarily reject your application because of an old bankruptcy, the card issuers will probably say no if you are currently undergoing bankruptcy proceedings.
Comparing The Best Credit Cards After Bankruptcy: Annual Fee
Of our three chosen cards, only the OpenSky® Secured Visa® Credit Card requires users to pay an annual fee of $35.
This is relatively low compared to non-secured credit cards, which can charge anywhere from $95 to over $500 for their annual fee. However, if you are annual-fee-averse, you may want to stick with the other cards on this list.
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Keep Steady With Your Home And Job
After bankruptcy, keeping a stable job and consistent residence is a way to demonstrate to creditors that you are reliable.
Many lenders consider your income and employment history when it comes to providing credit accounts because they want to know if you make enough to repay the loan. Having gaps on your resume may leave an impression with lenders that you could be a risky borrower.
Likewise, consistently living at the same residence might also demonstrate that you could be a reliable borrower. In the eyes of some lenders, it can indicate that you pay your mortgage or rent bill consistently on time and therefore might repay your loans in the same manner.
Will Taking On Debt Too Soon After Bankruptcy Hurt My Credit
Not necessarily. While taking out a new credit account may improve your credit, accumulating a lot of debt on the card is not a good idea.
This is true for everyone, not just bankruptcy filers. This ties back to the credit utilization ratio mentioned earlier.
If your utilization rate is kept at a healthy level, such as the recommended 30% or lower, lenders wont consider you to have unmanageable amounts of debt. Its when your utilization rate shows that you have more debt than available credit that your credit score begins to see negative impacts.
Example of credit utilization across three different cards.
Using a credit card responsibly really is as easy as paying your bill on time and keeping your credit card balance low. Its even better if you can pay it off each month, but a little credit card debt will not hurt your credit, so long as its manageable.
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Secured Vs Unsecured Credit Cards
Choosing between a secured or unsecured credit card after filing bankruptcy can be confusing. Your options after bankruptcy will likely include mostly secured credit cards, which provide excellent opportunities to rebuild your credit just like traditional cards do. With a secured card, you’ll be required to supply a security deposit up front, usually ranging from $49 up to $200 depending on the issuer. The deposit will secure your line of credit and will generally be equal to your credit limit. Assuming you keep your account in good standing and pay all your bills, that deposit will be returned to you in full when you either close the account or are upgraded to a non-secured card.
Though the terms of a secured credit card might not be as appealing as those offered with unsecured cards, don’t discount them completely. Issuers of secured credit cards will report your payments to credit bureaus and help boost your credit score the same as other cards. However, as with other credit cards, compare several options to be sure you are getting the lowest fees and interest possible. And although they may appear similar, don’t confuse secured credit cards with prepaid cards. Except in rare instances, prepaid cards don’t report to the credit bureaus and won’t help your score.
If an unsecured credit card is really what you’re after, it’s still an option, but proceed with caution.
Disclaimer:
Keep Your Balances Low
Dont max out your credit cards. The amount you use of your available credit known as your credit utilization ratio is part of what determines your credit score . Its not a good idea to use a lot of your credit limit, even if you pay your monthly credit card bill in full and on time.
As a general rule of thumb, credit experts encourage consumers to keep their balances under 30% of their overall available credit. For example, if you have a credit limit of $500, you should try not to use more than $150 before paying it off.
This is because lenders may consider people with high balances on their credit cards and other revolving debt as risky borrowers. The negative impact on your score magnifies as your credit utilization ratio increases.
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What Is The Difference Between A Secured Credit Card And An Unsecured Credit Card
An unsecured credit card is one in which the credit card company gives you a specified credit line without any security deposit backing the credit line. With an unsecured card, there is no monetary deposit required to be approved for the credit card.
Depending on your overall credit profile, a lender may not be willing to give you unsecured debt. In that case, a secured credit card or secured loan may be an option.
With a secured loan or secured credit card, you put down a portion or all of your credit limit as part of the application process. If you default on secured debt, then the credit card company will keep your security deposit.
Make Payments On Time
Your payment history makes up 35% of your FICO Score. Given how important having a history of consistent on-time payments is, you shouldnt wait to pay your bills.
Lets say you had a mortgage that was not included in the bankruptcy. Continuing to pay the mortgage on time is very important in rebuilding your financial life after bankruptcy.
You should also be on top of your other bills that are not in the credit report, such as utilities, cellphone bills and medical bills. If they fall too far past due and become delinquent, they could go into collections. The collection account may then end up on your credit report and put a dent in your credit.
If you have a hard time tracking what you owe, consider setting up automatic payments through your bank or possibly using budgeting apps to stay on top of your expenses.
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How To Recover From Bankruptcy
Through December 31, 2023, Experian, TransUnion and Equifax will offer all U.S. consumers free weekly credit reports through AnnualCreditReport.com to help you protect your financial health during the sudden and unprecedented hardship caused by COVID-19.
In this article:
Bankruptcy can be painful, embarrassing and devastating to your credit standing, but its promise of a “fresh start” is very real. And if you have a solid game plan, you can do much to recover from bankruptcy and restore your credit within a few years of filing.
Before we look at practical steps for speedy bankruptcy recovery, let’s consider the damage you’ll be trying to undo.
A bankruptcy causes a severe drop in your credit scores, and it persists as a negative entry in your credit file for many years. How long and exactly how much of a score drop depends on what your score was before filing, on the status of your existing credit accounts, and on the type of bankruptcy you file. A Chapter 7 bankruptcy, which wipes out all your debts, has the deepest impact on your credit scores and stays on your credit report for 10 years. A Chapter 13 bankruptcy, which restructures your debts so you pay off a portion of them in three to five years, remains on your credit report for up to seven years and is less harmful to your credit scores than Chapter 7.
Here are some important steps to begin rebuilding your credit after bankruptcy.
Compare The Best Credit Counseling Services
| Company | ||||
|---|---|---|---|---|
| HUD-approved housing counseling agency Member of the NFCC Financial Counseling Association of America | In-person or over the phone | Free credit counseling Initial fee: $40 Monthly fee: Average of $30 | ||
| Money Management International Best for Disaster Recovery Counseling | Member of the NFC | In-person or over the phone | Free credit counseling Initial fee: Varies by state Monthly fee: Varies by state | |
| InCharge Debt SolutionsBest Mobile Option | Member of the NFCC Accredited by the COA | Online and over the phone | Free credit counseling Initial fee: $75 Monthly fee: Average of $33 | |
| GreenPath Financial WellnessBest National Coverage | Member of the NFCC Consumer Affairs Accredited | Debt counseling, debt management, bankruptcy support, student loan counseling, housing counseling, debt management plans, and more | In-person, online, and over the phone | Free credit counseling Initial fee: $0 to $50 Monthly fee: $0 to $75 |
| ApprisenBest Online Resources | Member of the NFCC Accredited by the COA | In-person, online, or over the phone | Initial fee: $45 Monthly fee: $45 | |
| DebtWave Best for Credit Coaching | International Organization for Standardization Accreditation BBB Accreditation | Online and over the phone | Initial fee: Maximum of $75 Monthly fee: Maximum of $49 |
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Credit One Bank Platinum Visa For Rebuilding Credit Best Same Day Credit Card For Boosting Your Credit Score
- Prequalify without a hard credit inquiry
- Excellent fraud liability
- Offers cashback rewards of 1% on specific purchases
Perfect for: Users who want to improve their bad or fair credit.
Do you want to rebuild your credit and access your line of credit immediately after applying?
This great credit-builder card from Credit One Bank is an excellent choice. You can even enjoy a small cash-back rewards program and ultra-secure fraud liability, though the advertised 23.99% variable interest rate isnt fantastic.
Just as well, if youd like to extend your credit line in the future, there will be numerous credit increase opportunities available. The Credit One Bank mobile app is also very useful and will be where you can access your instant credit card number.
- Prequalify without damaging your credit score
- Fair credit will likely be approved
- Tons of card designs
Perfect for: Consumers with fair credit that dont want a hard inquiry on their credit account to see if they qualify.
If you want to apply for a card and get an answer without dealing with a hard hit to your credit score, this Milestone Mastercard could be perfect for you.
What To Do After Your Bankruptcy Is Discharged
Once your bankruptcy is discharged, you should do the following:
- Pull your credit reports from Equifax, Experian and TransUnion to confirm that your lenders are accurately reporting the discharge. Only the debts included in the bankruptcy filing should be reported as discharged.
- Double-check that all of those accounts included in the bankruptcy show a zero balance on your credit reports.
- Consider applying for a new credit card once youve confirmed that your credit reports are accurate.
Even after your bankruptcy is discharged, it may take a while to qualify for a new credit card. Some credit card companies may reject your application simply because you have a recent bankruptcy on your credit report. Others may be less stringent because your risk of filing for bankruptcy again is low, since there are rules restricting when you can file for a second bankruptcy.
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