Credit cards after bankruptcy: A step-by-step guide (2019)
How does bankruptcy affect getting a credit card?

Credit cards after bankruptcy: A step-by-step guide (2019)

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A secured credit card is your best bet. Here’s how to get one.

Bankruptcy can have long-term effects on your credit score and make it harder to obtain credit cards and other loans. But it’s possible to get a credit card post-bankruptcy, especially if you work on improving your credit over time.

Before and during bankruptcy: What to expect

If you haven’t declared bankruptcy yet or you’re currently filing bankruptcy, you’ll want to know what to expect. If you’ve already declared bankruptcy, skip to the next section.

Here are answers to a few questions you might have about bankruptcy:

If you’ve completed your bankruptcy process, you can start rewriting your financial future. One avenue is to compare credit cards after bankruptcy that, when used responsibly, can help you rebuild your credit score.

Follow these steps to get your first credit card after bankruptcy.

Step 1: Take stock of where you’re at

You’ve declared bankruptcy, which was a major blow. But you’re ready to start fresh. The first question on your mind might be:

Can I get a credit card after bankruptcy?

Yes. After you finalize your bankruptcy, you can start applying for new lines of credit, such as credit cards.

Before applying, know that your options may be limited. It could be hard to find a credit card provider to approve you until your bankruptcy no longer shows up on your credit report. Some banks automatically reject applications or reports that disclose bankruptcy.

Find your credit score

Bankruptcy can severely damage your credit score. It affects everyone differently, but according to FICO, it can take more than 200 points off your score. That represents a significant drop, as FICO scores range from 300 to 850.

Though your credit score won’t be where you want it to be, it’s helpful to know exactly where it stands. This will help you figure out how to rebuild from a bankruptcy. As you regain your financial footing, your credit score will increase and you’ll more easily qualify for credit products such as credit cards, mortgages and other loans.

Step 2: Prepare to apply for credit cards after bankruptcy

Be very selective as you apply for credit cards. Each time you apply for a card, the respective provider will initiate a hard inquiry — or hard pull — on your credit report. This will typically drop your credit score by a few points. You don’t want multiple hard pulls on your report, as this will significantly impact your already-weakened credit score.

So, keep these two major tips in mind:

  • Find the right card. Apply only for credit cards you have a good chance of approval for.
  • Apply for cards one at a time. Wait to hear back about your current application before applying for another card. If you’re denied, ask your provider for the reason. You may need to improve your credit score first.

Which types of credit cards should I compare?

One of your best options is a secured credit card. It may give you your strongest chances of approval.

While you look for a secured card, consider a provider that reports your payments to the three credit bureaus. If you consistently make your card payments on time, you could slowly see your credit score improve. This is critical while you recover from bankruptcy.

What is a secured credit card?

To get a secured card, you must put down an upfront cash deposit, which is typically a minimum of $200. This deposit usually becomes your credit limit.

Otherwise, a secured card works in the same way that your typical credit card does.

Because of the security deposit, more providers will be willing to take you on as a customer. This is a very important benefit while you still have a bankruptcy on your credit report.

How do I know whether I’ll be approved for a card?

Unfortunately, approval is never guaranteed. That said, you can still improve your odds. Here are a few things to consider:

  • What is your credit score?

    Many consumers have better chances of getting approved for a typical secured card if they have at least a fair credit score of 580 to 669.

    If your score is lower than that, you may find it more difficult to get approved. You may want to look for a secured credit card with no credit check.

  • Do you have a stable income?

    This is usually a requirement to get a secured credit card. If you’re concerned your income might disqualify you, consider a low-income credit card.

  • What are the provider’s application policies?

    Before applying for a card, check the provider’s policies. Don’t be afraid to call a representative to ask if the provider accepts applicants with bankruptcies.

    You can also ask about other details like minimum security deposit, credit-score and income requirements, and membership requirements.

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Step 3: Compare credit cards after bankruptcy

If you have fair credit, consider the first two cards below. Discover and Capital One consistently have two of the best secured credit cards on the market, and you’ll pay no annual fees for these products.

If you have heavy doubt whether your credit score will qualify, look into the cards from OpenSky and Green Dot. While they have annual fees, they’re targeted toward consumers with severely damaged credit.

Here are a few of the best credit cards for people with bankruptcies.

Discover it® Secured

Discover it® Secured

The Discover it® Secured can help you rebuild your credit and earn rewards. Eight months after you open your account, Discover will review your account to see if you’re eligible to graduate to an unsecured card. This means it will return your deposit while you continue using your card.

  • No annual fee
  • $200 minimum deposit

Secured Mastercard® from Capital One®

Secured Mastercard® from Capital One®
The Secured Mastercard® from Capital One® takes a different approach to secured card deposits. You could receive a $200 credit limit and have to deposit only $49 or $99. Depending on your credit, you may be asked to deposit the full $200. You can deposit more to receive a higher credit line.

  • No annual fee
  • $200 minimum credit limit

OpenSky® Secured Visa® Credit Card

OpenSky® Secured Visa® Credit Card
The OpenSky® Secured Visa® Credit Card has no credit check. The issuer accepts most applicants and reports on-time payments to all three credit bureaus. The card offers a higher maximum credit line than most secured cards with the maximum deposit being $3,000.

  • $35 annual fee
  • $200 minimum credit limit

Apply now

Green Dot primor® Mastercard® Gold Secured Credit Card

Green Dot primor® Mastercard® Gold Secured Credit Card

The Green Dot primor® Mastercard® Gold Secured Credit Card offers one of the lowest fixed APRs on the market. Also, the provider says you can apply with damaged credit.

  • $49 annual fee
  • $200 minimum credit limit

Apply now

How we selected our top cards

We picked our top cards by comparing several factors across products ideal for bankruptcies, including credit requirements, credit lines, annual fees, APRs, reward opportunities and reporting to the major credit bureaus. Our picks performed above and beyond the others, earning spots on our list.

What’s changed in 2019

Discover and Capital One offer excellent secured cards, and they’re still the go-to major providers for rebuilding credit. As your credit improves, each provider offers good options to ease you into unsecured cards.

Compare secured credit cards

Name Product Filter values Purchase APR Annual Fee Recommended Minimum Credit Score
19.64% variable
A secured Visa® credit card that helps you build your credit quickly.
26.74% variable
No credit history or minimum credit score required for approval.
14.74% variable
No minimum credit score and no credit history required.
20.74% variable
Build your credit with all three major credit bureaus.
9.99% fixed
This secured card can help you rebuild your credit with an initial deposit of $200 to $1,000.

Compare up to 4 providers

Alternatives to secured credit cards for building credit

If you’re ineligible for a secured credit card — or don’t want one —here are a few alternatives to consider.

  • Credit-builder loan. This is a unique type of loan that can help you build your credit while increasing your savings. It often comes with a relatively low-interest rate.
  • Store credit cards. While approval is never guaranteed, store credit cards generally have more lenient approval requirements. Do your research before applying for one, understanding eligibility requirements as well as the interest rates and fees you’ll pay. Check if your store-card provider reports payments to the three major credit bureaus. And above all, spend responsibly and make your card payments on time.

Be careful with other options for borrowing money

If you’re thinking about borrowing money, you might be considering personal loans or payday loans.

But beware: personal loans available to those with bankruptcies tend to have very high interest rates, and providers might not even report your account activity to credit bureaus. And the payday-loan industry is notorious for high fees and fraudulent operations.

When possible, try to stick to reputable secured cards, credit-builder loans and store credit cards. Use high-interest personal loans or payday loans as last resorts.

Alternatives to bankruptcy credit cards (for payments only)

If you simply want a more convenient way to pay, you don’t necessarily need a credit card. Here are two solid alternatives:

  • Debit card. If you want the convenience of paying via plastic, you can use a debit card instead of a credit card. This ensures you spend only the money you currently have, which will help you avoid more debt.
  • Prepaid card. A prepaid card lets you load money on it in advance, like a gift card. You can then use it anywhere credit cards are accepted.

Keep in mind these options don’t help you build credit. That said, it’s often a good idea to transition to a credit card eventually.

Step 4: What to do after you receive your credit card

Your credit card gives you a big opportunity to turn your finances around. Now that you have a fresh start, it’s a great time to build the right financial habits. These include:

  • Keep your card’s balance below 30% of your credit limit.
    This isn’t a hard-and-fast rule, but it’s a very good guideline to follow. It will help keep your credit score from being heavily impacted, and it will help you avoid too much debt.
  • Pay your card bill on time.
    This is extremely important for your credit score. From now on, look to have a spotless payment record. One great tip is to set up automatic payments so you’ll never miss a due date.
  • Pay your card bill in full each month.
    Before putting another cent on your card, try to pay off your entire balance. By staying vigilant and always clearing your balance at the end of the month, you can decrease your chances of getting into another bankruptcy.

If you have a secured credit card, you might want to aim for an unsecured credit card. With the latter, you won’t have to put down a security deposit.

You’ll likely need at least a good credit score to get the best unsecured cards. But once you reach that financial milestone, it’ll be something you can be very proud of.

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    Bottom line

    Bankruptcy is a serious decision not to be taken lightly. Filing can make qualifying and effectively using credit cards incredibly difficult. However, you still have options. Secured credit cards are among your best choices, and they can help you responsibly build your credit score.

    Once you get your first credit card after bankruptcy, see it as an opportunity to build strong financial habits that will serve you well for years to come.

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