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If you’ve recently filed for bankruptcy or it’s freshly in the rear view window now, building your credit back up should be a priority. One of the most common questions we get, “how long after bankruptcy can I get a credit card?” Weeks? Months? Years?
Let’s dive into it.
First things first, the type of bankruptcy you filed plays a role in how long it will appear on your credit report. If you’ve filed Chapter 7, your bankruptcy is going to be on your credit report for 10 years. If you filed Chapter 13, it will be on your credit report for 7 years.
Bankruptcy is going to have an impact on your credit for years to come, but you don’t have to wait to start rebuilding your credit.
One of the easiest ways to get started rebuilding your credit is by getting new credit, particularly a credit card. Are you seeing any credit card offers yet? Don’t be surprised, you may have a good shot at getting new credit.
How To Get A Credit Card After Filing Bankruptcy
Back to the original question, “how long after bankruptcy can I get a credit card?”
Each one of you reading this can vary when it comes to the total impact bankruptcy is going to have on your credit. When my parents filed for Chapter 13, their credit scores were around 830.
Afterward, their credit scores only dropped to 725. Within a few weeks after closing, they were getting credit card offers in the mail. Dad was approved for a $10K credit card limit.
Will you be able to get a credit card immediately after? Well, that depends on the severity of your bankruptcy.
If you’re like my parents, you can get a credit card now. They have 30+ years of credit on their file, paying all their bills on time. Even though they filled for bankruptcy, their 30+ year credit history helped them minimize the damage.
What If My Bankruptcy Was More Severe? Low Credit Score?
Some of you may have took a big hit on your credit score. If you now have low credit scores, you may not get approved for a traditional credit card.
While it’s true you’re going to have far less options getting a new credit card, there’s still a few options that will greatly improve your odds for getting a new credit card account.
Applying For Credit Cards
You do have the opportunity to apply for new credit cards. You have to be mindful that each time you do, you’ll likely see a hard inquiry on your credit report.
Lenders are going to be more timid giving you credit after filing for bankruptcy. However, if you have a long credit history that was in good standing, you’ll have a higher chance of getting approved for a new card.
You can sign up to websites like Credit Karma and Credit Sesame to get alerts on potential credit card offers.
Both of these websites are free to join, easy to navigate and have a ton of helpful features you can use to keep a close eye on your credit.
Both Credit Karma and Credit Sesame give you approval odds for credit cards. These odds show you which credit cards you have the best opportunities to get approved for.
While they are not 100 percent accurate, it can give you a general idea of what credit cards you may get approved for. That’s very helpful when you wouldn’t know otherwise.
The best part, you can see your approval odds without having a paid account or getting a hard inquiry on your credit report.
Again, these are not always accurate, both of these companies tell you that. Even so, if you’re fresh off bankruptcy and you want to get a credit card, you can apply for the card that has the best approval odds.
Secured Credit Cards
A secured credit card is the easiest way to get a credit card after bankruptcy. You can apply for it anytime after your bankruptcy.
Yes, you’ll be required to send in the deposit, but it gets you started “rebuilding your credit.” Just make sure it reports to the major credit bureaus.
The deposit you have to make can vary from one credit card provider to the next. Some companies will allow you to deposit up to $10K.
In return, you’d get $10K in credit on the card. Some companies may only allow up to a $500 deposit. In short, the amount you deposit becomes your credit line.
Before You Choose A Secured Credit Card
Secured credit cards usually have high interest rates and fees. Most of them don’t offer rewards and perks either. Despite that, it’s still a good type of credit card for building credit.
Again, just make sure the secured credit card you apply for reports to the top credit bureaus so it will help you build your credit back up.
Now, a secured credit card is not a pre-paid debit card. A lot of people make this mistake, thinking a pre-paid card is a credit card, which will report to the major credit bureaus.
That’s not the case.
What you need to do is make sure the card is a “secured credit card.” A pre-paid debit card is not going to help your credit.
These cards don’t report to the credit bureaus, therefore they don’t help you increase your credit score. Sure, pre-paid cards come in handy for certain circumstances, increasing your credit scores, not so much.
Some of you may be wondering what happens to your deposit in a year, 2 years, 5 years. One of the big negatives with secured credit cards is the fact that most of them will never give you a real credit line without a deposit.
It doesn’t matter how many on-time payments you’ve made, most of them won’t raise your credit limit. If you want a higher credit limit, you’ll need to deposit more money for it.
Furthermore, you’ll likely not receive your initial deposit back too, even if you close your account or not.
When choosing a secured credit card, make sure you take the time to see if you can graduate to a credit line without a deposit if you use the secured card responsibly.
These are the best secured credit cards to own. If you can’t find a secured credit card such as that, take the next best available option.