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Credit Cards After Bankruptcy

by Samantha Bennet on 2014/07/15

Can Credit Cards After Bankruptcy Help To Rebuild Your Credit?

Using credit cards after bankruptcy can help you to rebuild your credit. Yes, this is a fact. However, getting approved for credit cards after bankruptcy is not a cakewalk.

In most cases, your requests will be turned down the bank, leaving you in dismay and financial uncertainty. Let’s explore the credit card options in the market and find out which one will work for you.

  • Unsecured or conventional credit cards – The ‘typical’ credit card you carry is called an unsecured credit card. By credit card, we all mean the unsecured credit card but getting approved for this is the most difficult job because as the name of the card suggests, the card is not secured against a fixed deposit or other sorts of securities. An unsecured credit card is offered to a borrower based on his credit score. This is why credit cards after bankruptcy are seldom an unsecured credit card.
  • Secured Credit Card – A secured credit card is offered against a fixed deposit. This card functions like a regular credit card except that a fixed deposit is already made to cover your risks.
  • The prepaid card – A prepaid card is very much like your bank account or debit card. You can withdraw whatever cash you have in your account.

Choosing The Right Credit Cards After Bankruptcy

While an unsecured credit card sounds like a great deal after bankruptcy, getting approved for one is very difficult.

It will take a while and some work on your financial situation to get approved for one after going bankrupt. This leaves you with two options: prepaid and secured credit cards.

A prepaid credit card doesn’t help you in rebuilding your credit score because you are spending the money you have in your bank account. This leaves us with the last option, secured credit card.

Simply put, a secured credit card after bankruptcy can help you to rebuild your credit score but here are a few things you need to ask your lender before asking for one card:

  • Use a small fixed deposit to get accustomed to your new financial burden and repaying it without missing deadlines because you are looking forward to rebuild your credit score. The minimum amount for most secured credit cards is $500, so stick to this limit.
  • Choose a secured credit card with reasonable startup fee.
  • Make sure that your transactions are reported to all major credit bureau because you are here to rebuild your credit score and if your secured card company do not report your credit to major credit bureau, it becomes difficult to create an impressive credit score after bankruptcy.
  • Some banks force you to wait for a year for a secured credit card. If this is the case, look for other lenders.

A secured credit card is one of the best credit cards after bankruptcy that can actually help you to rebuild your credit score and put back your financial life on track.

Courtesy of CreditCardShoppe.com

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