How to Get a Credit Card After Bankruptcy
Research the terms and availability of secured credit cards., Complete an application for a secured card., Deposit money into the bank that issues your secured card., Make consistent deposits and payments so you can use the card as you would any...
Step-by-Step Guide
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Step 1: Research the terms and availability of secured credit cards.
These are ideal cards after a bankruptcy because risk for the cardholder and the lending institution is minimal.
That's because a secured credit card is "secured" with a deposit that you put down with the lender.
An unsecured card is a traditional credit card, which is issued without a deposit.
Check with the bank about their terms.
Choose a card with a reasonable fee structure.
Avoid excessive fees or annual insurance charges.
For example, if a secured card requires you to deposit $300 but charges $125 in an annual fee, you will not have much credit available, because the $125 comes out of the $300, leaving you with $175 in available credit.
Essentially, a deal like this pays the bank $125 for the privilege of holding onto your money — a 41% interest rate!Ask if the issuing bank reports your credit history to the credit bureaus.
You want them to record your timely payments and good credit standing.
Since the point of a secured card is to rebuild credit, there's no benefit to having one that doesn't report.
Look for a secured card that reports to all three bureaus.
Not all lenders will check with all three bureaus, so having a card that reports to all three bureaus improves your credit across the board. -
Step 2: Complete an application for a secured card.
You can apply by mail, online or over the phone.
When you apply online or by phone, you will be notified immediately if your application is accepted.
Different lenders have different policies for issuing credit-post bankruptcy, and each time a lender pulls your credit report, it can further lower your score.
So maximize your chances of getting a good deal and apply with a credit union first — they're nonprofit institutions, so their rates are usually better.., Find out how much credit you will be granted.
Most secured credit cards will give you credit up to the amount you have in your account.
Some companies will give you less, and some might give you more.
Typically, the credit limit on a secured card will be from 50% to 120% of the deposit amount., Eventually, the bank may allow you to use more credit that what you have deposited.
For example, you may deposit $500 but get $750 in credit. -
Step 3: Deposit money into the bank that issues your secured card.
-
Step 4: Make consistent deposits and payments so you can use the card as you would any other credit card.
Detailed Guide
These are ideal cards after a bankruptcy because risk for the cardholder and the lending institution is minimal.
That's because a secured credit card is "secured" with a deposit that you put down with the lender.
An unsecured card is a traditional credit card, which is issued without a deposit.
Check with the bank about their terms.
Choose a card with a reasonable fee structure.
Avoid excessive fees or annual insurance charges.
For example, if a secured card requires you to deposit $300 but charges $125 in an annual fee, you will not have much credit available, because the $125 comes out of the $300, leaving you with $175 in available credit.
Essentially, a deal like this pays the bank $125 for the privilege of holding onto your money — a 41% interest rate!Ask if the issuing bank reports your credit history to the credit bureaus.
You want them to record your timely payments and good credit standing.
Since the point of a secured card is to rebuild credit, there's no benefit to having one that doesn't report.
Look for a secured card that reports to all three bureaus.
Not all lenders will check with all three bureaus, so having a card that reports to all three bureaus improves your credit across the board.
You can apply by mail, online or over the phone.
When you apply online or by phone, you will be notified immediately if your application is accepted.
Different lenders have different policies for issuing credit-post bankruptcy, and each time a lender pulls your credit report, it can further lower your score.
So maximize your chances of getting a good deal and apply with a credit union first — they're nonprofit institutions, so their rates are usually better.., Find out how much credit you will be granted.
Most secured credit cards will give you credit up to the amount you have in your account.
Some companies will give you less, and some might give you more.
Typically, the credit limit on a secured card will be from 50% to 120% of the deposit amount., Eventually, the bank may allow you to use more credit that what you have deposited.
For example, you may deposit $500 but get $750 in credit.
About the Author
Teresa Gutierrez
A passionate writer with expertise in home improvement topics. Loves sharing practical knowledge.
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