If you have filed bankruptcy, you may feel like you will never be able to get credit again. Bankruptcy is an emotionally and financially draining experience. I am sure that needing bankruptcy help is not quite how you envisioned your life! It is easy to feel like things will never return to normal. The reality is that getting credit cards after bankruptcy is not that difficult. Today, I’m going to discuss what type of credit card you should be looking for, the key features you want, and how to eventually get unsecured credit.
If you’re looking an after bankruptcy credit card, the type of card you want to consider is a secured credit card. These credit cards typically offer guaranteed approval. What you will do is place a deposit with the lender and they will issue you a credit limit and the amount of that deposit. So if you make a deposit of $600, you’ll get a credit limit of $600. Lenders that specialize in this type of credit card know they are completely secured and that is why they are willing to lend to you just out of a bankruptcy. If you fail to make your payments they will simply take your deposit.
There several things that you want to look for in a secured credit card. Since you are trying to reestablish your credit history, probably the most important feature is that the credit card that reports all three credit bureaus. You also want to avoid paying an application fee and look for a card with low overall fees. Some credit cards have fees so high that they can take up most, if not all. of your available credit. By shopping around you can avoid this.
The best credit cards after bankruptcy are secured cards with a conversion feature. This means that after a set period of time say 6, 12 or 18 months, the credit card will convert to an unsecured card. This is important for several reasons. Obviously, the first is that you get your deposit back. The next is that an unsecured credit card is better you’re your credit score than a secured card. While getting a secured credit card can help you reestablish credit, in the long run your goal is to have only unsecured cards.
So what should you do next?
After you have six months of on-time payment history, you should begin researching companies that offer unsecured credit cards after bankruptcy. Such companies include Orchard bank and First Premier Bank. They will likely be willing to issue you a small credit limit. (Typically under $800.) While this doesn’t seem like much, on-time payments can lead to an increase in your credit limit. Over time you can enjoy the credit limits the ones had.
The key here is being smart. You should feel grateful to get credit cards after a bankruptcy discharge – don’t abuse the situation! It can be very easy to fall into the same habits they got you into trouble in the first place. If you know you’re someone who will be likely to get over extended again, the smartest thing is to stick with credit cards with very small limits, or cut your cards up. That way your credit is reestablished, but you can’t get into much trouble
Getting credit cards after a bankruptcy is easy if you just follow the simple system. Start with a secured credit card, look for a card with the right features, and then seek out companies that specialize in offering unsecured credit cards to people with challenged credit passed. You should now be able to seek out after bankruptcy credit cards with confidence!
By the way, during this time one of the most important things that you can do is realize that filing for bankruptcy does not define you. Many people survive bankruptcy and thrive afterwords and you can too! In fact, many people even decide to go to college after bankruptcy!
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