Credit Cards After Bankruptcy

Consumers that have filed for bankruptcy or undergone a debt settlement program know that not all hope is lost in terms of your credit. Those who have undergone the bankruptcy process know that eventually things get better and your credit eventually comes back (in many scenarios better than it was before). Many consumers find themselves in better positions simply because they have a fresh start and were able to turn over a new leaf with regards to their financial situation. Most consumers would be shocked at how quickly individuals receive large extensions of credit only a couple years after filing for bankruptcy. The credit industry is quite forgiving with regards to consumers who file for bankruptcy, granted you take some positive steps early on.

Re-establishing Credit After Bankruptcy

The first step to re-establishing your credit and acquiring credit cards after bankruptcy is to apply for a secured credit card. Since you are collateralizing the credit card with a cash deposit, you should be able to qualify for a secured credit card any time after the bankruptcy filing has been completed. Moreover, the great thing about a secured credit card is that you can easily convert the secured card into a standard unsecured credit card after approximately 6-9 months of timely payments (time frame sometimes depends on the creditor) and receive your cash deposit back. This is a quick and easy credit win and one that consumers should not overlook. Any secured credit card will do, but we sometimes recommend our clients get the Discover IT secured card.

How Long Should You Wait to Apply for a Credit Card After Bankruptcy?

While there isn’t always a clear timeline, as every applicant’s situation varies, generally you will want to wait at least 1 year before applying for a standard unsecured credit card after chapter 13, and possible a little longer if you’ve had debts discharge through a chapter 7 filing. The reasoning is quite simple, you just do not want to get unnecessarily rejected too early after the filing and you might want to look to get a more preferable credit card. Waiting this time frame should allow you to get approved for a better credit card than applying to soon (even if you’re approved!).

Credit cards can definitely be a great tool for rebuilding credit after bankruptcy. However, if you have available cash for securitization and want to expedite the process of re-establishing your credit, the best way to go early on is to either get a secured credit card or a secured credit builder loaner as soon as the bankruptcy process has finished. This way you are re-establishing your payment history and the length of time your accounts have been established. After you’ve successfully demonstrated timely payments and credit worthy behavior you will surely qualify for standard unsecured credit cards and can look to get a credit card you might be more interested in keeping for the longer term.