You Can Improve Your Credit After Bankruptcy
Dont give up after youve filed for bankruptcyyou can improve your credit score. But be patient, because it could take some time. If you want a little extra help, sign up for our free , or consider ExtraCredit. Restore It, a feature on ExtraCredit, gives you an exclusive discount to one of the leaders in credit repair. They can help you work to get your score where you want it to be after youve filed for bankruptcy.
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How We Chose Our List Of Top Cards For Bad Credit
Bankrate uses a 5-star scoring system that evaluates credit cards based on annual fees, APR , sign-up bonuses, rewards programs and other features. For credit cards tailored to people with poor or bad credit, we focus on the attributes you might be most concerned about when selecting a new credit card.
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Best Unsecured Credit Card After Bankruptcy
Our take: While it carries an annual fee, the Credit One Bank Platinum Visa for Rebuilding Credit offers a simple cash back rewards earning scheme and a chance to rebuild your credit with an unsecured card. |
When you have bad credit, particularly with a bankruptcy on your credit report, it can be difficult to get an unsecured card. Those you can qualify for will usually carry a ton of fees and offer little in the way of rewards. But if youre determined to avoid putting down a deposit, the is a decent post-bankruptcy option.
To start, the card offers 1% cash back rewards on eligible purchases of gas, groceries and mobile phone, internet, cable and satellite TV services. While this rate is not impressive compared to that of dedicated cash back cards, earning rewards in such practical categories should help you offset the cards annual fee at least a bit.
Additionally, the cards $300 minimum initial credit limit could be eligible for an increase over time, though Credit One does not offer a specific time frame or terms for credit line increases. Youll also get free online access to your Experian credit score and can set up alerts via email and text to ensure you keep up with payments and avoid late fees.
Why Its Smart To Get A Credit Card After Bankruptcy
When you file for bankruptcy, being proactive about rebuilding your credit is a vital step in regaining financial stability. A credit card can be a useful tool during this process.
Theres nothing easy about declaring bankruptcy.
From the stress that precedes the decision to the restrictions that come after, its a long road for both your financial and emotional health.
Then theres the damage done to your credit. Itll likely take years to recover.
But a bankruptcy doesnt have to be a life sentence: Heres how to start improving your credit scores today.
Already know how to restore your creditworthiness? Check out our favorite credit cards for bankruptcy recovery.
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Does Bankruptcy Wipe Your Credit Report Clean
Myth: All bankruptcy debts will be wiped clean from your credit report.
The truth: While bankruptcy may help you erase or pay off past debts, those accounts will not disappear from your credit report. All bankruptcy-related accounts will remain on your credit report and affect your credit score for up to seven years or as long as they normally would, though their impact will diminish over time.
Which Credit Cards Are Easiest To Get After Bankruptcy
Below is a list of credit cards that are likely to approve you after BK. These are taken from experience, readers feedback and from other readers from around the web. Weve had lots of readers comments at the end of the post, which is worth reading. We will list store cards after doing more research.
Score of 500+
Contrary to what many think, you can get a low annual fee or even no annual fee card after BK. You might have to wait for about a year before you apply. If you need a card immediately, then a secured card is probably your best bet.
First Premier Bank has been in the sub prime market for the longest time. Beware of the interest rate . Best not to carry a balance with this card because interest charges could start to add up.
Household and Orchard Bank has traditionally fallen into this group. But they have been bought out by Capital One and are not being offered and promoted at the moment.
Secured Credit Cards
Aside from unsecured cards, secured cards offer an easier alternative. But if you wish to apply soon after BK, then be aware that mainstream banks are most likely to decline your application . Below are a couple of viable secured cards.
Of all the cards mentioned here, this is probably the most reasonable one in terms of fees. Just one low annual fee and a deposit of your collateral and off you go with the card. .
Get Both Secured And Unsecured Credit Cards
Success Stories
We also had another reader, Patricia, who left this comment:
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Self Credit Builder Account + Secured Visa Credit Card
Best for building credit with savings
- This card is a good fit for: Someone whose goal is to build their savings along with their credit history.
- This card is not a great choice for: Those looking for a line of credit immediately. You wont actually receive a credit card until youve saved $100 in your Credit Builder Account and made three on-time monthly payments in a row.
- What makes this card unique? This savings account and credit card combination is pretty unique on its own, but even more so because the process doesnt require a hard inquiry on your credit report.
- Is the Self Credit Builder Account + Secured Visa® Credit Card worth it? If saving money is part of your financial plan and youre fine with waiting a few months to gain access to the credit card, the Self Visa is a viable option. The ability to have two lines of credit without a hard inquiry on your report is pretty remarkable.
Jump back to offer details.
How To Use The Opensky Secured Visa Credit Card
Since the OpenSky Secured Visa Credit Card is mainly used for building credit, youll want to make sure you use it responsibly and wisely.
Charge only what you can afford to pay off and pay your credit card bill early or on time each month to ensure the information reported to the three credit bureaus has a positive impact on your score. If you dont pay in full and on time, not only will that negatively affect your credit score, but youll end up paying much more over time thanks to this cards high variable APR.
With a low credit limit, youll also have to be careful about your reported , or the balance you owe in relation to your credit limit. This is the second-most impactful factor in your credit score after payment history. Experts recommend keeping your utilization rate at least below 30% for the best credit score results.
If you deposit $200 upon account opening, that means youll need to keep your balance under $60 each month to maintain a healthy ratio. OpenSky does allow you to deposit up to $3,000, so you can increase your limit if you have the cash to fund it.
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How To Avoid Bankruptcy In The Future
Opening a new credit card is only one piece of the puzzle when it comes to rebuilding credit.
To make sure you dont fall into or bankruptcy again, you need to develop responsible credit management habits.
Here are three basic rules you should follow during the credit-building process:
- Make on-time, in-full payments each month: Set up autopay or create calendar reminders. By paying your balance in full each month, you can completely avoid interest charges on purchases with most credit cards.
- Monitor your balances carefully: For the best results, limit your credit card balances to 10% of your available credit.
- Limit your credit applications: Open new accounts gradually and only as needed.
You dont need to wait 7 to 10 years to improve your credit. Follow the guidelines above, work on building good financial habits, and, little by little, youll bring your credit and your life back to where you want it.
Check Your Mailbox For Credit Card Offers
Some credit card issuers, knowing you cant file bankruptcy again for several years, will be quick to send offers for their credit cards. These credit card offers are some of your best chances of getting approved, so keep your eye on the mail.
If you previously opted out of receiving pre-approved card offers, credit card issuers won’t send you any offers. Youll have to opt into receiving offers again by going to OptOutPrescreen.com.
Keep in mind that pre-approved credit card offers dont necessarily guarantee approval. Youll still have to apply and go through the application approval process. If youre denied, the explaining why your application was turned down. Also, remember that each card application you file will ding your credit score, so don’t apply for too many at once, and wait four to six months between rounds.
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How To Build Credit After Bankruptcy
Once your bankruptcy is discharged and you’ve opened a new credit account that you manage responsibly, there are still other steps you can take to help rebuild your credit after bankruptcy:
Become an authorized user. If you don’t qualify for an unsecured credit card, and cannot afford a secured card, you may be able to begin accumulating a positive payment history as an on a friend’s or family member’s credit card account. The account will appear on your credit reports, but the primary cardholder is responsible for making payments to the card issuer. If the primary user has stellar credit and makes all payments on time, your credit scores are likely to improve if the primary user has a record of late payments or a large amount of debt, however, that won’t do your scores any good.
Consider a . These are small personal loans, most commonly offered by credit unions, specifically designed to help people improve their credit. The financial institution issues you a small loantypically a few hundred dollars or up to $1,000and places that sum in a special interest-bearing savings account in your name. You cannot touch that money until you pay off the loan in full, by making regular monthly payments, typically for a period of no more than 12 months.
Everything You Need To Know About Credit Cards For Bad Credit
A bad credit score can be a result of insufficient credit history, past financial mistakes, a high debt balance or a combination of circumstances. Whatever the reason, a low credit score can prevent you from getting many credit cards. Credit cards for bad credit typically come with fewer qualification requirements, different fee structures and specific features to help your credit-building journey along. The key is to choose one that best fits where you are financially and where you want to go. Many cards for bad credit are secured, meaning they require an initial deposit that often serves as your credit limit, but they are otherwise similar to a traditional credit card. The more commonly-carried option, unsecured cards, are available for bad credit as well, but avoiding the initial deposit often leads to higher interest rates and unfortunate fees.
Personal finance experts at Bankrate have evaluated todays best credit cards for bad credit and chosen the top options. We also offer tips on qualifying for a credit card and improving your credit score. Use this information to make the best choice for your financial future.
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How To Build Your Credit Score
With time, careful decision-making and the right credit card, you can make a bad credit score better and gradually build a healthier credit profile.Start by following these five tips for improving a bad credit score:
How Bankruptcy Affects Your Credit Score
A Chapter 7 bankruptcy filing will stay on your credit report for up to 10 years. But your discharged debts will be removed from your report after seven years because of the statute of limitations. As time passes, your bankruptcy will impact your credit less and less. Using a bankruptcy-friendly credit card will help improve your credit score and increase your credibility with potential lenders, allowing you to resume normal financial routines.
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Retail Credit Cards Are A Good Option
Retail credit cardsthose offered by stores you shopoften have less strict approval criteria for applicants. Youre more likely to be approved for a closed-loop retail credit card, which is one that doesnt have a network logo like Visa or MasterCard and can only be used in the retail store . These cards don’t have as significant of an impact on your credit scores as co-branded ones, but every little bit counts when you’re rebuilding credit.
What Happens To Company Credit Cards
If your employer issued you a credit card to pay for travel and other expenses, you might be concerned about including it in your bankruptcy. Youll only have to list the card if youre liable to the lender for the balance.
Company credit cards come in three varieties based on whos liable on the account:
- The monthly statement goes directly to the employer, and the employer is responsible for paying the bill.
- The monthly statement goes to the employee, who is liable for payment of the account, then seeks reimbursement from the employer.
- A combination of the two. The statement usually goes directly to the employer, but employees reimburse the company for any personal expenses.
When you file for bankruptcy, you must list the card if you have any personal liability on it. If your company shoulders that entire burden, and you have no responsibility for the account, you shouldn’t list the card.
If youre not sure whether youre responsible for payment, your human resources department should be able to clear that up.
But this may clue you in: if your employer did nothing more than hand you a card and tell you what you could purchase with it, its probably a company-issued card that carries no individual liability.
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Tips For Using Credit Cards After Bankruptcy
Improving your credit after bankruptcy may take some time. But with the right card and financial know-how, you can get the process started and with enough positive information added to your credit history over a long enough period of time, your credit scores should start to improve along with your credit rating .
Here are some pointers to keep in mind as you use credit cards after bankruptcy and focus on improving your credit health.
