How To Get Credit Cards After Bankruptcy

Rebuilding your credit profile is important after a bankruptcy. The sooner you are able to establish good credit and show potential lenders that you can borrow responsibly, the sooner you will be able to borrow money for larger items, such as a house or car. Rebuilding can be easier than you may think, especially if no debts survived your bankruptcy. The steps below outline the best way to obtain credit cards after a bankruptcy.

1. Although getting a prime credit card may be your ultimate goal, they can be hard or impossible to get directly out of bankruptcy. The best way to rebuild your credit profile -- and work your way up to a prime card -- is to start with a secured credit card. These are cards where you will send the bank or company a security deposit and your credit limit will be the amount of your deposit. Secured credit cards after bankruptcy are a good start as these cards are issued by many trusted banks, who may be willing to send back your deposit and allow you to keep the card after a reasonable timely payment history. This step is especially important for those who have a FICO score below 550.
2. After you have made timely payments on a secured card for some time, you can try applying for a few store cards. These cards often have much smaller limits and less restrictive qualifying requirements than major credit cards. This means they will be easier to qualify for and easier to handle with their tiny limits. The drawback to this is that they also often have higher interest and penalty rates. You should not apply for any of these cards until your FICO is at least 550, preferably 600.
3. After you have completed steps one and two, made timely payments to all of your cards, and let those cards age for a minimum of 6 months to 1 year, you may be ready to apply for a major credit card. There are prime cards and there are subprime cards. Prime cards will have low to no fees, high limits, and will often also offer rewards for using the card. Subprime cards will come with high fees, low limits, and will not offer rewards. The longer you wait and let your secured and store cards age with a good payment history, the easier it will be to qualify for prime cards. However, if you are in a hurry to obtain a major unsecured credit card, then a subprime card will be your best option. Subprime is usually reserved for those in the 550-650 FICO range. Once you hit 650, you may be able to qualify for some prime cards. Indeed, unsecured credit cards after bankruptcy are still achievable when you have the right strategy.

When deciding what to apply for and when to apply for it, remember that there are other factors to consider besides the time since your bankruptcy. For example, if a negative account survived your bankruptcy (this usually happens with student loans that have gone into default), it may take more time in steps one and two before you graduate to step three. The good news is that, the more time you take to rebuild now, the more options you will have open to you in the future.