Getting a Credit Card after Bankruptcy
The period following your bankruptcy discharge will be characterized by attempts to get back to your feet. Since youa��ve just had your debt discharged, youa��re probably reluctant to accumulate some new one. Getting a new credit card after bankruptcy isna��t necessarily the smartest thing to do but it may be inevitable.
How soon after bankruptcy can you get a new credit card? Should you opt for it? The general consensus is that you should wait but if you have to get a credit card, herea��s what to do.
Acquaint Yourself with Different Policies
Banks and financial institutions that issue credit cards have their specific terms and conditions. If you want a new credit card immediately after the bankruptcy discharge, youa��ll need to acquaint yourself with the specifics.
In some instances, the terms and conditions will state that individuals who have a non-discharged bankruptcy will not qualify for a credit card.
The guidelines will sometimes be difficult to understand. The terms and conditions may leave important things out, making it impossible to determine if an individual will qualify for a regular credit card following the discharge. The good news is that an alternative does exist and this alternative can be used to build a good credit score.
A Secured Credit Card is a Good Choice
If you really do need to get a new credit card after bankruptcy, a secured one will be the optimal choice.
Secured credit cards are financial instruments created for people who are attempting to improve their credit score. They require the putting down of a security deposit, which serves as a kind of collateral.
The deposit in the case of a secured credit card is equal the line that the card holder will be entitled to. Thus, you cana��t spend more than the sum youa��ve already entered in the form of a deposit. Because a secured credit card is a safe option for the lender, ita��s readily available for individuals dealing with financial difficulties and those who have just gone through a bankruptcy discharge.
One thing to keep in mind is that the annual percentage rates on secured credit cards tend to be higher. Through responsible use, however, a secured credit card can turn in a powerful credit building tool.
A secured credit card isna��t the only readily available option following your bankruptcy.
Becoming an authorized user is another chance you may want to take advantage of. In this case, you will be signed as a user on somebody elsea��s account (preferable someone who has stable finances).
Being an authorized user also provides you with great tools for the establishment of your credit score. The payment history on the card is added to your credit report, regardless of the fact that it is under someone elsea��s name. For best results, you will need a card with a high limit and a low balance.
The primary account holder is still responsible for all credit card debt. This is the main reason why you have to enter such an arrangement with someone that you trust. Setting some rules on spending and repayment in advance will also be vitally important to give everyone peace of mind.
Ita��s a general rule of thumb to avoid unsecured credit cards in the period immediately after your bankruptcy filing. People who have a bad credit may still be entitled to such options occasionally. The problem with such cards is that they tend to have a low credit limit and a high annual percentage rate.
Unsecured cards for people with a bad credit score also have high processing fees, which means theya��ll be too expensive to maintain. Even if you want the freedom that such a credit card will provide you with, chances are that it will cause a lot more trouble in the long run. Consult with an experienced bankruptcy lawyer to make an informed choice.