Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.
Getting a credit card after bankruptcy discharge in Canada
Learn about the credit cards that accept bankruptcies in Canada and start rebuilding your credit today.
You have a good chance of qualifying for a credit card after bankruptcy discharge if you take the necessary steps to improve your credit score and your overall financial health. Learn more about how you can get a credit card after bankruptcy and compare the best credit cards that accept bankruptcies in Canada to find the best fit.
Compare credit cards after bankruptcy in Canada
When looking for credit cards after bankruptcy discharge, you’ll ideally want to get a a credit card that can help build up your credit score again. However, there are a couple of other options if you’re having trouble qualifying for typical cards.
Secured credit cards after bankruptcy
Looking for the best secured credit cards after bankruptcy? This is the best place to start. Secured credit cards require you to put down a security deposit which serves as your credit limit. This security deposit also acts as collateral for your credit card provider in the event you miss payments. If you use your secured credit card responsibly and make your repayments on time, you should see your credit score start to increase after a few months or years (depending on the state of your score when you get started).
Credit cards after bankruptcy that won’t build credit
These credit cards don’t help you build credit but they’re very easy to qualify for and can be a good option if you’re having trouble getting approved for a regular or secured credit card.
1. Prepaid cards after bankruptcy
Prepaid cards can be a good option if you want the convenience of shopping online but aren’t able to get a regular credit card. These cards can be reloaded with money from your bank account as needed, and you can use them wherever Mastercard or Visa are accepted. Just be aware that these cards tend not to come with additional rewards or benefits.
2. Visa Debit or Debit Mastercard
Getting a debit card that’s affiliated with a credit card provider is an easy way to get the convenience of a credit card without needing to qualify for one. Most big banks and credit unions offer Visa Debit cards and Debit Mastercards for no additional cost. Just be aware that you won’t typically get rewards or benefits included with these types of cards.
What is bankruptcy?
Bankruptcy is the process of legally declaring that you can’t repay your debts. You will have to sign all of your assets over to a licensed insolvency trustee, who will then discharge you from paying back the money you owe. Once you’ve filed for bankruptcy, creditors can no longer garnish your wages or contact you in an effort to collect debts.
A licensed insolvency trustee is the only professional who can deal with bankruptcy in Canada. These specialized lawyers are federally regulated by the government to help make the cost of bankruptcy more reasonable. Just be aware that filing for bankruptcy won’t necessarily eliminate all of your debts and your credit score will decrease dramatically when you file.
How long does bankruptcy stay on your credit report?
Bankruptcy stays on your credit report for about 6-7 years after you’re discharged, depending on your province and the reporting credit bureau. If you file a second bankruptcy, this stays on your report for 14 years. The good news is that you can start to rebuild your credit as soon as you’re discharged, though it will take several years to get your credit score back to normal in most cases.
Can I get credit cards after bankruptcy discharge?
You can definitely apply for credit cards after bankruptcy discharge but you may be rejected if your bankruptcy still shows on your credit report. Until you can qualify for a regular credit card, you may want to apply for a secured credit card to build your credit while you spend money. This will make sure your credit score is in decent shape when your bankruptcy ends.
You may also want to consider rebuilding your credit without a credit card. For example, you could take out a credit builder loan or apply for a bad credit car loan to increase your credit score. You could then take out a Visa Debit or Debit Mastercard with your bank or sign up for a prepaid card to enjoy the convenience of a credit card without needing to qualify.
What to do before you apply for a credit card after bankruptcy
There are a few things you can do before you apply for post bankruptcy credit cards in Canada to make sure you’re in the best position to qualify:
- Request your credit report. You’ll want to know what your credit score and credit report look like before you apply for a credit card. You can request a copy of your credit report for free from one of Canada’s main credit bureaus, Equifax or TransUnion. Once you know your score, you’ll be able to figure out which cards you can apply for.
- Correct any errors on your credit report. Go through your credit report with a fine-toothed comb to make sure that there are no errors that could be bringing your score down even further. If there are, you can report them to the credit bureaus to have them corrected.
- Call your credit card provider. You may want to call your credit card provider to find out how it handles clients with bankruptcies. You can ask about the minimum credit score requirements you’ll have to meet to qualify for the card of your choice, and see if they make exceptions for approving bankruptcies in certain situations.
How to apply for credit cards that accept bankruptcies in Canada
You can follow these steps to apply for after bankruptcy credit cards in Canada:
- Figure out which credit card you want. Compare credit cards after bankruptcy from a number of providers to find the one that best suits your personal situation.
- Make sure you meet eligibility requirements. Double check that you meet income requirements and credit score criteria for your chosen credit card before you apply.
- Apply for the card of your choice. Apply for the credit card of your choice by visiting the main site of the provider you’re interested in.
- Fill out application details. Fill out personal details such as your full name, address, email and phone number to start your application.
- Authorize a credit check. Submit to a personal credit check to see if you can get approved for the credit card of your choice.
- Click submit. Once you’re ready to apply, click submit on your application or call your credit card provider to apply over the phone.
Getting a credit card during bankruptcy
You should avoid applying for credit cards or using your existing credit cards shortly before filing for bankruptcy. Your credit card provider can say that this credit use had “dishonent intent“, and may result in your credit card debt not being discharged. Your existing credit cards may be closed during the bankruptcy process even if they’re fully paid off.
What to do after you receive your credit card
The tips below can help you to manage your credit card responsibly after you’ve been approved for a credit card:
- Make your repayments on time. You’ll need to make all of your payments on time to build your credit score. It can help to set up automatic payments from your bank account or set up a monthly reminder on your phone to make sure you don’t miss a payment.
- Pay your card in full each month. You can save money on interest and avoid your balance getting too big if you simply pay the amount you owe off every month. This can help you rebuild your credit and make sure you don’t get sucked into another cycle of debt that’s difficult to get out of.
- Avoid using your card for cash advances. Try not to take out cash advances using your credit card since these often come with higher interest rates and can be difficult to pay off. If you need emergency cash, you may be better off looking into a bad credit loan (as long as the APR for that loan is below 22.99%).
- Keep your card balance below 30% of your credit limit. Spend only a portion of your allowable credit limit each month to show the credit bureaus that you’re in control of your spending. This can help to increase your credit score as well.
- Don’t pay your credit card off with borrowed money. Avoid paying down your credit card debt with other forms of debt such as payday loans or cash advances from other credit cards. This is because your interest payments can quickly get out of hand, leading you to spiral into more unmanageable debt.
Alternatives to credit cards after bankruptcy
If you’re ineligible for a credit card, you may be able to get access to fast cash or build your credit score with the following products:
- Bad credit loans. Some lenders may be willing to grant you a personal loan despite your bad credit history. However, make sure you compare the interest rates and fees before you apply.
- Payday loans. Payday loans can give you access to fast cash but come with extremely high fees and usually have to be paid back within two weeks. You should avoid using these types of loans wherever more affordable options exist.
- Bank overdrafts. You may be able to get a personal overdraft from your bank if you have a long standing relationship with it. You can reach out to your bank to find out how to tap into your overdraft and learn more about what fees you’ll have to pay.
Other factors that affect your credit card application after bankruptcy
Credit card issuers weigh a range of other factors before approving or denying your request for credit. These include the following:
- Income requirements. Most credit card companies specify the minimum annual income you’ll need to make to apply for a credit card. You may not be able to qualify for more premium credit cards with a lower income, while most basic credit cards require you to make at least $12,000 per year.
- Employment status. You may be required to show proof of employment to qualify for some after bankruptcy credit cards. In this case, you could show letters of reference from employers or pay stubs. Many credit card companies won’t approve applications from people who don’t have secure employment, even with a decent credit score.
- Other financial information. Each credit card issuer will have its own process to evaluate the risks involved in lending to you. Your bankruptcy will certainly be assessed along with your history of missed payments. Your provider may also ask for information about your current debts or assets.
You can apply for many different types of credit cards after bankruptcy, with the most common type being a secured credit card to rebuild your credit. Find out more about the options available for credit cards after bankruptcy and explore suitable alternatives to rebuild your credit or get the cash you need if you’re having trouble qualifying for the card of your choice.
Bankruptcy credit cards FAQs
More guides on Finder
Guide to finding the best prepaid card in Canada in May 2023
We show you the best prepaid credit cards in Canada, whether you’re looking for a prepaid card with no fees, cash back rewards, or travel perks, or more.
How to buy Sui (SUI) in Canada
This guide provides step-by-step instructions on how to buy Sui, lists some exchanges where you can get it and provides daily price data on (SUI).
5 apps like Nyble in Canada
Compare apps like Nyble in Canada to access emergency funding.
Your guide to buying and financing a car in Canada with RightRide.
Compare bad credit car loans in BC
Your guide to bad credit car loans in BC and how to find the right financing for your needs.
Camera financing in Canada
Compare six ways to finance a camera in Canada, including options for good and bad credit.
How to buy Pepe (PEPE) in Canada
This guide provides step-by-step instructions on how to buy Pepe, lists some exchanges where you can get it and provides daily price data on (PEPE).
Personal loans in Saskatchewan up to $50,000
Compare lenders to find the best personal loan in Saskatchewan for your needs.
Compare bad credit loans in Winnipeg
Compare interest rates and eligibility requirements of bad credit loans in Winnipeg.
Money Management for Teens: 7 Tips from Financial Experts
Teaching teenagers how to budget can be a tricky task. 7 experts give their best tips on how to budget for teenagers.