Can I Have Credit Cards After Bankruptcy?
By Ashley Jones on April 10, 2010, 10:37 am Posted in Finance NewsAfter you experience a bankruptcy, it is important to re-establish your credit as soon as possible. You should consider your bankruptcy as a new beginning. Though it might be limiting at first, you can use it to build your credit history once again. If you are unable to pay off your debts, this is the best means to eventually restore your credit. An excellent way to establish good credit after bankruptcy is by obtaining a credit card. Even though you may think that you cannot get a credit card after bankruptcy, you can be approved.
What Are Your Options
Thought getting a credit card can be somewhat difficult under these circumstances, there are many lenders out there, who are more than happy to give you a credit card. There are many things to consider, when you apply for a credit card after bankruptcy. Let’s take a look at some of the steps you must take.
How To Get A Credit Card After Bankruptcy
Though lenders will usually acknowledge that your credit rating is essentially destroyed after bankruptcy, you will still receive a range of credit card offers in the mail. Many of them will say that you are, “pre-approved.”
Before you accept an offer like this though, you must understand the conditions. Chances are, the interest rate on this card will be very high. It may be very hard to manage fees that come about if you have to make a late payment, and the annual fees will usually be quite high. If you can, try to pick a card without too many fees. Using a card like this properly, and paying money back on time will help to build your new credit score, and rebuild your credit. However, you must always be aware of any payments that you owe. A good strategy is to use the card to make one or two small purchases a month, then pay off the full balance every month. Over time this will increase your credit score.
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- Credit Card Reform Act: 5 Positive Aspects For Americans
It’s great to get a secured credit card, but make sure that the card you select is actually doing something to rebuild your credit and to help you make better financial choices.
First it should have a grace period (the time when you don’t have to pay interest on your purchases) of at least 25 days.
Second, it should be reported as unsecured, so potential creditors see it as a good credit reference and not as a card that’s secured by your savings, so it’s not actually extending credit.
Third, your payment history should be reported to the credit bureaus – if it’s not, it’s doing nothing to rebuild your credit.
There are only two that I know of that currently meet all three of those criteria. They’re listed in the book Bounce Back From Bankruptcy (www.newcreditafterbankruptcy.com)
There are also many unsecured cards that are available now for consumers who have gone bankrupt but there isn’t a single one I’d recommend.
Peace and prosperity,
Paula Langguth Ryan
author, Bounce Back From Bankruptcy
CM Press
Paula does clarify a few good points to consider. By unsecured she means a pre-paid debit card IS NOT going to help you in the long run. A typical card will not usually be obtainable, this leaves only a few cards, like the HSBC Orchard Bank card. This particular card offer automatically is adjusted based on your personal situation. A perfect fir for those recovering from bankruptcy.