Submitted by Rachel R on Mon, 04/11/2016 - 10:05am
Get a yes to credit cards after bankruptcy - here's how
Image Source: Flickr User Ged Caroll
Filing bankruptcy does mean a significant hit to your credit score, but remaining in significant debt you can’t pay can often produce worse outcomes. Once you file, though, your first thought should be how can you improve your credit score after bankruptcy. Credit cards can be a path to help re-establish yourself as creditworthy, but how long will it take before you can get a card?
How bankruptcy affects your credit score
Bankruptcy represents an initial hit to your FICO score after you file. The higher your score at the time you file, the greater that hit will be. However, from there, as the bankruptcy ages, its impact diminishes. But the bankruptcy filing is not the only determiner in getting a secured or unsecured credit card to help you improve your credit score after bankruptcy.
Approval policies vary widely by card issuer
Usually, you need to wait four to six months after discharge to warrant an approval and be aware that every card issuer has different policies for approval. Also, different cards offered by the issuer may have different criteria. Because of these differences, making smart choices in which cards to apply for can mean success over failure. So how do you know what the policies are so you know where to apply?
Which card issuers will work with bankruptcy filers?
Most credit card companies have at least one card offering, whether secured or unsecured, that will accept bankruptcy filers. But in some cases, you may be ineligible if your bankruptcy has not been discharged such as with an ongoing Chapter 13 or very recent Chapter 7. It’s important to do your homework BEFORE you apply for a card. When you apply, it’s called a “hard pull” on your credit which lowers your credit score marginally until it falls off.
The more hard pulls you have, the lower your score will be. Inquiries take two years to age off of your credit report, but their impact diminishes over time as it does with anything. What can also diminish the impact is if you apply at the same time for a couple of different cards from the same issuer since that should reduce the number of hard pulls on your credit.
Do secured credit cards come with guaranteed approval?
Since a secured card is based on a cash deposit that matches the “credit” line, it seems like it should be a no-brainer for card issuers to say yes, but in fact, even secured cards have criteria for approval. You can be denied if your income cannot be verified, if you filed a bankruptcy within the last couple of months, if your score is below their minimum threshold, or your expenses exceed your income.
How to get started rebuilding credit with cards
The first step is to make sure your credit report is accurate. Don’t assume the bankruptcy will be properly reflected and that all debts in the petition will show a zero balance due. Look for incorrect accounts that are not yours, those that should have been included in the bankruptcy, and older accounts that should have dropped off your report by now because they’re older than seven years.
Once your credit report is cleaned up, you’re ready to go. For more help with improving your credit after bankruptcy, check out Credit Score Keys for more information. And if you’re still stuck with debt you can’t pay, contact the Law Offices of John T. Orcutt today for a free North Carolina bankruptcy consultation. Call +1-919-646-2654 now for a no-obligation appointment at one of our convenient locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.
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