Credit cards after bankruptcy discharge–It can be tough to receive a credit card after bankruptcy discharge. Some lenders may look at consumers’ poor payment histories as a sign that they are not likely to repay the debt as promised. There are those credit card companies that believe in offering customers a second chance to prove that they are worthy of a second chance at restoring their credit. Customers must be very careful when applying for these types of credit card offers because some credit card companies are out to make as much money from their customers as possible
Can You Get A Credit Card After Bankruptcy Discharge?
Yes, it is possible to get a credit card after bankruptcy. Many credit card companies want to offer another opportunity to establish credit. Customers may receive pre-approval applications in the mail after the bankruptcy discharge. The FICA breakdown for credit score that determines qualification for credit is 35% – payment history, 30% – amount owed, 15% – credit history, 10% – credit mix, and 10% new credit.
Cardholders must choose a credit card very carefully because not all credit card deals are beneficial. Many offers require expensive upfront payments to own a credit card. Other credit card companies offer high interest rates that may not be worth it. Some states do not have caps on the interest rates that can be charged. A situation like this can potentially push customers back into the same horrifying financial s as before. Looking over all of the documentation and reading the fine print is the only way to prevent future financial problems.
Customers should consider having credit card applications and credit card offers evaluated by an experienced individual within a credit counseling agency. These individuals are experienced in credit card terminology, bankruptcy laws, and credit laws that customers may not fully understand. The representatives can outline the customers’ options for credit cards to restore creditworthiness.
How to Get Approved for Credit Cards After Bankruptcy
Customers have several options to get approved for credit cards. If the credit cards that are offered to customers after their bankruptcy discharge are not desirable to the customer, there are other ways to build credit so that the best credit card rates are made available to them.
- Customers may apply for a secured credit card. Secured credit cards are available to customers who secure the credit limit with money of their own. For example, a $300 credit limit may be available to customers on a credit card if they can offer the credit card company a $300 deposit to hold. In some cases, the deposit is lower. The credit line that customers receive is usually $500 or less. Many credit card companies report the credit history to credit agencies. Check with the credit card companies to make sure that they do.
- Apply for an unsecured credit card. Unsecured credit card options are available, but customers should apply with caution. Do not settle for the first offer that is offered. Compare options to find the credit card that has the best interest rates and offers low fees to use. Customers can check with their banks to see if any special credit card offers are available to bank customers. Proceed with preapproval applications with caution. Some of the offers may be based on customers’ previous credit history before the bankruptcy. The terms and offers may change once the credit card companies pull their credit. Make sure that the offer is worthwhile before accepting the credit card.
- Apply for a small loan. Paying a loan on time will help rebuild credit so that credit card companies will approve customers for credit cards. Credit history and payment history make up 50 percent of the credit score. Once the loan is paid customers may want to take out another small loan until the credit score increases enough to receive a credit card. Also, try to pay off the debts early to help increase the credit score a little more.
- Invest the money from a small loan into a short term CD or savings account with a high yield interest. Put the money from the loan in a savings account or a certificate of deposit to earn interest that can be uses as desired. Set up the loan payment to come out of a checking account so that there is not temptation to miss the payment or spend the money.
Reestablishing credit after a bankruptcy discharge may be tough for some people. Only apply for credit cards with good terms that can help rebuild credit. In no time, customers can become owners of their very own credit card.