A bankruptcy filing may significantly impact your credit score and can result in a prolonged credit re-building process. With that said, it is possible and can be a good idea to apply for a credit card after bankruptcy.
In most cases, you will only be eligible for secured credit cards or credit cards explicitly created for those with a low credit score.
Applying for a credit card as early as possible after your bankruptcy is discharged, or finished, is the ideal course of action, as this will allow you to begin repairing your credit almost immediately.
Credit cards may help you improve your credit score.
You may believe it is prudent to avoid credit cards if you have just filed for bankruptcy. After all, credit card misuse may have played a role in your bankruptcy. However, properly using a credit card is one of the most efficient methods to improve your credit score.
Surprised? Well, let’s find out how.
By obtaining a secured credit card and responsibly using it, charging a few modest sums each month, and paying off the debt in whole and on time, you demonstrate that you’re a reliable borrower. As a consequence, your credit rating will begin to improve.
Please take note that since prepaid credit card transactions are not typically disclosed to credit agencies, you cannot utilize them to improve your credit score. If you have just declared bankruptcy, here’s what you need to know about applying for a credit card after filing for bankruptcy.
Eligibility for secured cards.
Generally, you won’t be eligible for most unsecured credit cards for a number of reasons immediately after filing for bankruptcy. When you apply for a credit card, your bank takes into account two critical factors: your income and your credit score.
You may have stable employment and a solid salary, and even if you have paid off all of your past debts completely. Nevertheless, you will still be regarded as a high-risk client if your credit rating is poor and you have a bankruptcy in your history.
A secured card is excellent for this reason, and you may be accepted even with a recent bankruptcy. The credit limit on a secured card is usually equal to the amount of the security deposit you make.
Additionally, there are some unsecured credit cards that will not verify your credit score or will offer a line of credit to someone with a bad credit history. These cards usually come with higher fees and interest rates. Secured cards are often less expensive.
Does it have anything to do with the type of bankruptcy?
Personal bankruptcies cover two broad categories:
● Chapter 7
Chapter 7 bankruptcy provides you a new start since after the bankruptcy is discharged or finished, you will no longer be liable to creditors, but your credit score will be substantially impacted.
A Las Vegas Chapter 7 attorney can help you with your Chapter 7 bankruptcy and suggest when to apply for a new credit card.
● Chapter 13
Your debts are reconstructed in this form of bankruptcy, which means that you and your creditors settle on how much of the debt you will return over a three- to five-year period. Any leftover balance on your indebtedness is discharged. Las Vegas Chapter 13 bankruptcy attorneys and law firms, will tell you that while this kind of bankruptcy is less detrimental to your credit, it still has a significant impact.
You may have to wait for the bankruptcy to be discharged.
When you may apply for a credit card will depend on the length of time it takes to resolve and finish your bankruptcy procedures.
In the case of Chapter 7 bankruptcy, things may often be finalized, and your debts – discharged within four to six months after the original filing. Following that, you may apply for a credit card.
However, for a Chapter 13 bankruptcy, it may take between three and five years to complete since it is a restructured debt repayment plan. Therefore, your bankruptcy will be dismissed only when you have paid your last payment.
Bankruptcy is a delicate and complex proceeding, and you want someone with plenty of experience to consult you and guide you through the process and help you determine the scope of the discharge.
If you would like to find out whether bankruptcy is the right option for you, please request a call-back by submitting a short online form. All initial consultations are free and confidential.