Getting your credit back on track after a bankruptcy may feel impossible. After all, a bankruptcy stays on your credit report for seven to 10 years and can drop your credit score by over 100 points, leaving you burdened with bad credit.
But recovery is within reach, and believe it or not, getting a new credit card can be an important first step toward rebuilding your credit after bankruptcy. We’ve broken down what to look for when evaluating credit card options after bankruptcy, along with some of our top picks.
What to look for in a credit card after bankruptcy
When you’re searching for a bankruptcy-friendly credit card, you’re best off sticking to cards designed for people with bad credit. These tend to have good approval odds and often include features that can help you control your spending while you monitor and rebuild your credit.
Here are a few things to look out for when choosing a post-bankruptcy credit card:
- Can you prequalify? While it doesn’t guarantee approval, prequalification allows you to get a sense of your chances of acceptance before you apply for a new card. Many cards offer some form of preapproval or prequalification, so take advantage when you can. You can also try out our CardMatch tool to see if you’re eligible for any personalized credit card offers, with no impact to your credit score.
- What fees does it carry? Credit cards for people with damaged credit tend to charge a lot of fees, including annual fees, program fees, activation fees, authorized user fees and more. Such fees may simply be the cost of rebuilding your credit, but avoid them if you can.
- What’s the APR? Even if you’re convinced you won’t need to carry a balance, it’s important to keep your new credit card’s APR in mind. Most of the cards you can get with a bankruptcy on your record will carry high APRs, but some are especially eye-popping.
- Is it a secured or unsecured card? Secured cards are easier to get after a bankruptcy, but they require you to put up a refundable security deposit that usually doubles as your credit limit. If you’d rather not tie up money, a smaller number of unsecured cards for bad credit are available, though they tend to offer much lower credit limits.
- What’s the card’s credit limit? Credit utilization – the amount you’ve borrowed compared to your total available credit – accounts for 30% of your credit score, so be sure the card’s credit limit is high enough to give you some breathing room…Reead more>>