How To Get a Credit Card After Bankruptcy

Immediately after bankruptcy, it may be hard to get a credit card, but with the right steps, it shouldn't take too long.

After you've gone through a Chapter 7 or Chapter 13 bankruptcy, it will be harder for you to get a credit card, at least right away. But there are alternatives to getting a regular credit card from a big bank – secured credit cards, department store cards, or credit cards with a cosigner. After using one of these for some time, you will improve your chances of getting a regular credit card.

But before you start applying for credit cards, think carefully whether you really need one. For many people with prior financial trouble, staying away from credit cards, at least for a while, is a smart move. If you must have a credit card, consider using it only when absolutely necessary (for example, to book a hotel room), and resorting to cash for everything else.

If you decide you need a credit card after bankruptcy, read on to learn about your options.

Options for Getting a Credit Card After Bankruptcy

After bankruptcy, banks offering regular credit cards may be reluctant to work with you. If you can't get a regular credit card, consider these alternatives. With most of these options, if you can use them successfully and responsibly for several months or a year, you will improve your credit history, and your chances of getting a regular credit card from a major bank.

Secured Credit Cards

Most people with poor credit histories can get a secured credit card. Here’s how a secured credit card works. You deposit a sum of money with a credit union or bank. The bank gives you a credit card with a credit limit for a percentage of the deposited amount.

The downside to secured credit cards: They often charge high interest rates and have other fees. Make sure the card issuer reports the account to the credit reporting agencies. To learn more about getting and using a secured credit card, see Getting a Secured Credit Card After Bankruptcy.

Get a Cosigner

A cosigner promises to pay the credit card account if the primary account holder defaults. Since the cosigner is on the hook, the lender is more likely to give you a credit card. Make sure the credit card issuer will report both your name and the cosigner's name to the credit reporting agencies. If it only reports the cosigner's name, the card won't help you build credit.

Get a Credit Card From a Department Store or Gas Company

Department stores or gasoline companies are more likely than big credit card issuers to give you a credit card. They often open accounts with a very low credit limit. If you charge small amounts and pay off the balance in full each month, you will begin to build positive credit history. But be careful: Interest rates tend to be very high on these cards. Carrying a balance is not a good idea.

When You Are Ready to Apply for a Regular (Unsecured) Credit Card

After you’ve spent some time establishing good credit through a secured credit card, department store credit card, or some other method, you may begin thinking about getting a regular credit card from a major bank. Follow these tips when you apply:

  • Apply for a credit card when you have a job, have lived at the same address for more than a year, and when you don’t have a lot of credit inquiries on your credit report.
  • If your spouse has excellent credit, apply for a joint card, or at least indicate on the application that you are married.
  • Paint yourself in the best light. If your past credit problems were not your fault (for example, you had high medical bills because of an illness or you were laid off from your job of many years), let the creditor know.
  • Apply for cards with companies you do business with. For example, apply for a card from your bank or your telephone company.

For more information, see Getting Credit Cards, Loans, and Mortgages After Bankruptcy.

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