Getting Credit Cards After Bankruptcy

One of the worst after effects of bankruptcy is that it destroys your credit score and bankruptcy remains on your credit history for ten years. This means that getting any kind of loan (including credit cards) would be very difficult i.e. almost impossible for you when you have debts/ credit cards in bankruptcy.

So, what can you do in order to get credit cards with bankruptcy still on your credit report?

Well, the first thing to do is to take stock of the situation and figure out what went wrong with you i.e. why did you have to file bankruptcy in the past… what were the reasons? In most cases, financial indiscipline is the culprit but in some cases there are genuine reasons e.g. a medical emergency. While there isn’t much that you can do about exigent situations, you can surely learn from your financial mistakes. A better financial planning and discipline can do the trick for you and safeguard you from again getting into a bankruptcy scenario. At the same time you would also need to do something to improve your credit score and credit history.

Getting unsecured credit cards after bankruptcy can be ruled out for a long period of time. So, your best bet would be to get secured credit cards after bankruptcy. The secured credit cards would not only be the best credit cards after bankruptcy but also the only feasible option for getting a credit card after bankruptcy. And a secured credit card can serve many purposes at the same time for you.

Let’s first recall what a secured credit card is…

A secured credit card is a credit card that is issued by a bank or a financial institution against the money deposited by you with them. This means it is not really a credit card in the sense that you are not getting any “real” credit… instead you are just spending money from what you have deposited with the bank or the financial institution who has issued you the credit card. From the issuer’s perspective it is a secure bet because if you do not pay your dues then they can get their money back by using the deposit that they already have with them… and hence the name secured credit card.

Now, coming to the advantages of getting secured credit cards after bankruptcy…

The first advantage is that it will bring in the much needed financial discipline in you and prevent you from spending beyond your means because your credit limit is linked to the amount of money you have deposited with the card-issuing institution/bank. As pointed out before, this financial discipline is the most important preventive measure for anyone who has filed bankruptcy previously.

The second advantage is that you can use this secured credit card to better your credit score. For this, you have to just ensure that you pay your credit card dues on time and in full. As you keep using your credit card and make timely repayments, your credit score will rise and you will be in a better position to get other loans (and even jobs… as many recruiters also consider credit score as part of their selection criteria for employment).

And of course, the secured credit card will provide you the same convenience and safety as any other credit card (against carrying cash). Moreover, you can enforce further financial discipline by looking at your credit card statements and identifying what are the unnecessary expenses that you could still do away with for the next months.

So, go ahead and get your secured credit card… and make the most of it.




One Response to Getting Credit Cards After Bankruptcy

  1. Geoff says:

    The key is to rebuild a bad credit history slowly but surely. The financial institution isn’t really taking a risk with secured credit cards, but at least it gives the ex-bankrupt chance to get back on the credit ladder.

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