Start increasing your credit score with a secured credit card
Rebuilding your credit profile is important after a bankruptcy. The sooner you establish a good credit score and show potential lenders that you can borrow responsibly, the sooner you can borrow money for larger items, such as a house or car. Rebuilding can be easier than you may think, especially if no debts survived your bankruptcy. The steps below outline the best way to obtain credit cards after a bankruptcy.
- Although getting a prime card may be your ultimate goal, such cards can be hard or impossible to get directly out of bankruptcy. The best way to rebuild your credit profile—and work your way up to a prime card—is to start with a secured card. Before you apply, make sure you understand the rules and limitations. These are cards where you send the bank or company a security deposit, and your credit limit is the amount of your deposit. Secured cards after bankruptcy are a good start because they are issued by many trusted banks, which may be willing to return your deposit and allow you to keep the card after a reasonable, timely payment history. This step is especially important for those with a FICO score below 550. It's true that you can use these to rebuild credit, but you need enough money for a security deposit first.
- After you have made timely payments on a secured card for some time, thereby increasing your credit score, you can try applying for a few store cards. These often have much smaller limits and less restrictive qualifying requirements than major cards. This means they are easier to qualify for and easier to handle with their tiny limits. The drawback is that they also often have higher interest and penalty rates. You should not apply for any of these until your FICO score is at least 550, preferably 600.
- After you have completed steps one and two, made timely payments to all your cards, and let them age for a minimum of 6 months to 1 year, you may be ready to apply for a major card. There are prime and subprime cards. Prime cards have low to no fees, high limits, and often offer rewards for using them. Subprime cards come with high fees, low limits, and no rewards. The longer you wait and let your secured and store cards age with a good payment history, the easier it will be to qualify for prime cards. However, if you are in a hurry to obtain a major unsecured card, a subprime card will be your best option. Subprime cards are usually reserved for those in the 550–650 FICO range. Once you hit 650, you may be able to qualify for some prime cards. Indeed, unsecured cards after bankruptcy are still achievable when you have the right strategy.
When deciding what to apply for and when to apply, remember that there are other factors to consider besides the time since your bankruptcy. For example, if a negative account survived your bankruptcy (this usually happens with student loans that have gone into default), it may take more time in steps one and two before you graduate to step three. The good news is that the more time you take to rebuild now, the more options you will have in the future. Now that you know how to get a credit card after bankruptcy, start looking for credit card applications that meet your needs.
Get a credit card after bankruptcy
Start increasing your credit score with a secured credit card
Rebuilding your credit profile is important after a bankruptcy. The sooner you establish a good credit score and show potential lenders that you can borrow responsibly, the sooner you can borrow money for larger items, such as a house or car. Rebuilding can be easier than you may think, especially if no debts survived your bankruptcy. The steps below outline the best way to obtain credit cards after a bankruptcy.
- Although getting a prime card may be your ultimate goal, such cards can be hard or impossible to get directly out of bankruptcy. The best way to rebuild your credit profile—and work your way up to a prime card—is to start with a secured card. Before you apply, make sure you understand the rules and limitations. These are cards where you send the bank or company a security deposit, and your credit limit is the amount of your deposit. Secured cards after bankruptcy are a good start because they are issued by many trusted banks, which may be willing to return your deposit and allow you to keep the card after a reasonable, timely payment history. This step is especially important for those with a FICO score below 550. It's true that you can use these to rebuild credit, but you need enough money for a security deposit first.
- After you have made timely payments on a secured card for some time, thereby increasing your credit score, you can try applying for a few store cards. These often have much smaller limits and less restrictive qualifying requirements than major cards. This means they are easier to qualify for and easier to handle with their tiny limits. The drawback is that they also often have higher interest and penalty rates. You should not apply for any of these until your FICO score is at least 550, preferably 600.
- After you have completed steps one and two, made timely payments to all your cards, and let them age for a minimum of 6 months to 1 year, you may be ready to apply for a major card. There are prime and subprime cards. Prime cards have low to no fees, high limits, and often offer rewards for using them. Subprime cards come with high fees, low limits, and no rewards. The longer you wait and let your secured and store cards age with a good payment history, the easier it will be to qualify for prime cards. However, if you are in a hurry to obtain a major unsecured card, a subprime card will be your best option. Subprime cards are usually reserved for those in the 550–650 FICO range. Once you hit 650, you may be able to qualify for some prime cards. Indeed, unsecured cards after bankruptcy are still achievable when you have the right strategy.
When deciding what to apply for and when to apply, remember that there are other factors to consider besides the time since your bankruptcy. For example, if a negative account survived your bankruptcy (this usually happens with student loans that have gone into default), it may take more time in steps one and two before you graduate to step three. The good news is that the more time you take to rebuild now, the more options you will have in the future. Now that you know how to get a credit card after bankruptcy, start looking for credit card applications that meet your needs.
Get a credit card after bankruptcy
By Howtodotips
Start increasing your credit score with a secured credit card