Editor's ChoiceCategories Credit Type Issuers Blog

Which Credit Cards Are Easiest To Get After Bankruptcy?

04/16/2009

Below is a list of credit cards that are likely to approve you after BK. These are taken from experience, readers feedback and from other readers from around the web. We’ve had lots of readers comments at the end of the post, which is worth reading. We will list store cards after doing more research.

Score of 500+

Contrary to what many think, you can get a low annual fee or even no annual fee card after BK. You might have to wait for about a year before you apply. If you need a card immediately, then a secured card is probably your best bet.

First Premier Bank has been in the sub prime market for the longest time. Beware of the interest rate (which is high). Best not to carry a balance with this card because interest charges could start to add up.

Household and Orchard Bank has traditionally fallen into this group. But they have been bought out by Capital One and are not being offered and promoted at the moment.

Secured Credit Cards

Aside from unsecured cards, secured cards offer an easier alternative. But if you wish to apply soon after BK, then be aware that mainstream banks are most likely to decline your application (even though the card is secured!). Below are a couple of viable secured cards.

Of all the cards mentioned here, this is probably the most reasonable one in terms of fees. Just one low annual fee and a deposit of your collateral and off you go with the card. (See Review).

first progress secured credit card First Progress is issued by Synovus Bank and you’ll probably get approved. One of the more reasonable sub prime secured cards available now that Orchard and Household are not around anymore.

applied bank gold secured credit card The Applied Bank Gold Secured Credit Card has a low interest rate though it has no grace period. So making sure you pay in full is very important because the charges start to accrue immediately.

Get Both Secured And Unsecured Credit Cards

Secured credit cards require you to deposit money in a savings account in case you default on the balance. They eventually revert to unsecured credit cards and you get your initial deposit back. Or, if you default on the loan, then the deposit is used to cover your balance, and you can walk away without the card hurting your credit too badly.

All in all, secured credit cards are by far your best bet, and I speak from experience. After my own bankruptcy I got one secured credit card, and one bad credit, unsecured credit card. The secured card had a much better rate of interest, lower fees, and I will get my deposit back.

The unsecured credit card had a high interest rate, monthly fees, and about $250 worth of fees charged to the card initially. The initial fees forced me to pay the balance down immediately so that it didn’t lower my credit score.

Success Stories

Some folks are able to get normal credit cards almost right out of bankruptcy too. A reader, Joseph , sent me the letter below about his experience after bankruptcy. He was approved for a Platinum Capital One Card 8 months after his bankruptcy. When I asked him what he did to repair his credit he replied:

The only thing I did was get a WaMu secured card after my bankruptcy (filed 1/25, discharged 5/01) in July of last year. It got canceled in January due to Chase’s decision. I tried to apply at BoA for a secured card, but they denied me because it wasn’t one year since the discharge, which was on 5/01.
Other than that, I did nothing to repair my score…I applied for a capital one card the other evening and instantly got approved. I don’t know all the details of the credit limit, but it was for a platinum card at 22%.
However I keep no balances anymore, so that doesn’t matter!

I was so excited to hear this from Joseph, because it does give hope to those of us in the process of repairing our credit after bankruptcy. I should point out though, that Joseph is doing everything the right way – he applied for a secured credit card right after bankruptcy and made regular payments. He also makes a point not to carry a balance on his credit cards, which is the single biggest thing you can do to help your credit score aside from making on-time payments.

We also had another reader, Patricia, who left this comment:

There are several places that will give you credit, but use it wisely. I filed bankruptcy 4/30/08 discharged 8/27/08 (will never forget that day). Recently got the nerve to apply for a credit card in April was approved through Capital One. I spent $11 and paid it off before I got my first statement (4/11/09). Target is also known to be bankruptcy friendly but if you are not a target shopper I wouldn’t get one. Anyway my advice is be patient and things will come to you.

So, it’s looking like Capital One is a good place to apply for credit once you have repaired your credit score a bit.

As for my own experience, right out of Bankruptcy I applied (and got) a secured credit card from Orchard Bank, an unsecured credit card from Indigo Bank (used to be a different company and I can’t remember the name now – but it’s currently Indigo Bank).

About a year after my bankruptcy I got a Target card as well.

So, please don’t worry that you won’t be able to get credit after bankruptcy. You definitely can. You may have to put down a deposit, or pay high interest rates for a while. I just chalk it up as the price for my past mistakes, and work towards qualifying for better terms. It can be done, and easily!

How about you? Do you have a credit repair story? Which cards did you use to raise your credit score? Please leave a comment below!

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