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Getting a Credit Card After Bankruptcy

bankruptcyOne of the fallouts from filing a bankruptcy is that a person’s credit is going to take a severe hit. Very often, clients wonder if they will be able to apply for a credit card after filing for bankruptcy. While a bankruptcy filing on the credit report makes credit approval harder, it is important to note that different lenders have different policies. The creditors look at any number of factors in order to determine whether or not a person is eligible for their credit card.

Factors such as income, how much time has passed since the bankruptcy and other issues all come into play when creditors are considering lending money to somebody that has filed bankruptcy. Simultaneously, it is a good idea to take a careful look at the terms and conditions, especially the rate of interest that companies offer after one completes the bankruptcy.

Secure credit cards

One of the best ways to help build credit back up after a bankruptcy has been completed is to consider using a secured credit card. Secured credit cards have been designed specifically with people in mind that are trying to improve their credit. Secured credit cards are different from normal credit cards because they require that the person holding the card put down a security deposit, usually a few hundred dollars.

The deposit that has been placed is equal to the credit line. For example, if somebody puts $250 down on a credit card, the $250 will become that credit line. This makes secured credit cards a relatively safe bet for lenders, who are seeking to extend credit lines to people with significantly lower credit scores.

Just like with other credit cards, with unsecured credit cards, it is important to make sure that the person who has the credit card makes the payments on time, keeps the balance low and uses the secured credit card just like they would an unsecured one. By being careful with usage, it is possible to improve the credit score significantly.  Over time, the credit card company may actually also decide to offer the borrower an unsecured credit card.

Cleaning up a credit report

The most critical thing a person can do after they have finished filing a bankruptcy is to go to work repairing that credit. In order to do this, there are some simple steps that must be taken. Once credit has been cleared, and the credit score starts to improve, getting a credit card should not be difficult at all.

One of the first things that a person should do after the bankruptcy has been discharged is to ensure that all the discharged debts have been cleared off the credit report. If the credit report still shows delinquent accounts after the bankruptcy has been discharged, odds are that they are causing the credit score to be lower. A person should immediately contact the credit bureaus, that are prone to errors, and get it fixed.

Having the bankruptcy documentation available to send to the credit bureau will ensure that they take the complaint seriously and remove any missed reporting. For more information, call our office.

Note: This is for information purposes only and does not constitute legal advice.