Your credit score will suffer after you file for a bankruptcy. However, that does not mean that you cannot get a credit card. It will be a lot harder for you to get approved for a credit card if you have a bankruptcy on your credit report. Lenders take other factors into consideration when deciding whether you can get a credit card.
Every Issuer has its own Policies
Issuers have different policies regarding bankruptcy. For example, Capital One states on its website that people who have non-discharged bankruptcy cannot apply for a credit card. Non-discharged bankruptcy is a case that is unresolved.
Many issuers do not clearly state what criteria they use to deny or approve applications. Most people do not know whether they qualify until they get approved or denied for a credit card. They may also see the hard inquiry on their credit report. Having a certain credit score is not the only requirement for getting a credit card. However, you can get a secured credit card to rebuild your credit after bankruptcy.
What is a Secured Credit Card?
A secured credit card is a type of credit card that requires you to make a deposit before using it. Your credit line is usually equal to the amount that you put down. For example, if you put down a $1,000 deposit, then your credit limit will be $1,000.
The issuer is protected if you do not make payments on your credit card. That is why lenders are more likely to extend credit if a deposit is made first. It is important to note that a credit card is different from a prepaid debit card. If you have a secured credit card, then your deposit will be used as backup just in case you cannot pay the bill. It helps you build your credit if you pay the bills on time.
You load money onto the pre-paid debit card. You can use the pre-paid debit card to make purchases. However, you will not be able to use a pre-paid debit card to build credit.
Carlos Colon is the financial education program at mPowered, which is a non-profit financial organization. He believes that secured credit cards are a great choice. He also encourages people to choose credit unions over banks. Credit unions typically have fewer requirements than banks. The longer it has been since bankruptcy passed, the more likely you will be to get approved.