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Best Credit Cards After Bankruptcy

June 2024

If you have recently filed for bankruptcy, it can be challenging to rebuild your credit. However, repairing your credit profile is not impossible, and a good place to start is with a credit card.
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A bankruptcy filing can stay on your credit report for up to ten years and significantly impact your credit score. A credit card can help you build your credit score if you use it responsibly. However, not all credit cards are created equal, and some are more suitable for people who have filed for bankruptcy than others.
For that reason, we put together a list of the best credit cards after chapter 7 and 13 bankruptcy
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Factors to consider when choosing a credit card after bankruptcy

Here are some factors to keep in mind when choosing a credit card after bankruptcy:

Interest rates and fees

Credit cards can come with high-interest rates and fees, so it's essential to choose a card with reasonable rates and fees that fit your budget.

Credit limits

As a person who has filed for bankruptcy, your credit limit might be lower than what you are used to. It's important to choose a card with a reasonable credit limit that will help you rebuild your credit without leading you into more debt.

Rewards and benefits

Some credit cards offer rewards and benefits such as cashback, miles, or points. While rewards can be enticing, it's essential to focus on rebuilding your credit first before worrying about rewards.

Secured vs. unsecured cards

A secured credit card requires a security deposit to open, while an unsecured card does not. A secured card might be easier to qualify for, but an unsecured card can help you build credit faster.

Card issuer's reputation

It's essential to choose a credit card from a reputable card issuer. You can research card issuers online to find out about their customer service and other important factors.

Tips for rebuilding credit after bankruptcy

Here are some tips for rebuilding your credit after bankruptcy:
  1. Pay bills on time: Paying your bills on time is one of the most important things you can do to rebuild your credit. Late payments can significantly impact your credit score.
  2. Keep credit utilization low: Your credit utilization ratio is the amount of credit you are using compared to your credit limit. Keeping your credit utilization low can help improve your credit score.
  3. Monitor credit reports: You should monitor your credit reports regularly to ensure that there are no errors or fraudulent activity on them.
  4. Consider credit counseling or financial coaching: Credit counseling or financial coaching can help you develop a plan to rebuild your credit and manage your finances better.

FAQ

What is the difference between chapter 7 and chapter 13 bankruptcy?

Chapter 7 bankruptcy is also known as liquidation bankruptcy, which means that the court sells off your non-exempt assets to pay off your creditors. This process typically takes three to six months, after which your remaining unsecured debts are discharged.
On the other hand, Chapter 13 bankruptcy is a reorganization bankruptcy that involves creating a repayment plan to pay off your debts over three to five years. Chapter 13 bankruptcy is typically used for those who have a regular income and want to keep their assets while still paying off their debts.

Can I get a credit card before the bankruptcy is discharged?

Technically, you can apply for a credit card before your bankruptcy is discharged, but it's unlikely that you'll be approved. Most credit card companies will not approve applicants who have a pending bankruptcy. Additionally, using credit cards while you're in the process of bankruptcy can be seen as an attempt to incur debt that you know you cannot repay, which is considered fraudulent.

How long after bankruptcy can I get a credit card?

You can typically apply for a credit card after your bankruptcy has been discharged, which is usually three to six months after filing for bankruptcy. However, it's important to note that you may only qualify for certain types of credit cards, such as secured credit cards, which require a deposit and typically have lower credit limits and higher fees.

Bottom line

Rebuilding your credit after bankruptcy can be a long and challenging process, but it's not impossible. Choosing the right credit card and using it responsibly is a great way to start. Remember to pay your bills on time, keep your credit utilization low, monitor your credit reports, and consider credit counseling or financial coaching to help you achieve your financial goals.

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