When you file for bankruptcy, you may have concerns about your credit. Your credit score takes a hit, and the bankruptcy will be on your credit report for several years. So is it a good idea – or even possible – to apply for a credit card after bankruptcy?
The short answer is "yes," you can – and should – start rebuilding your credit. But you may face limitations, and you will want to apply with caution. Here are a few suggestions on applying for a card and other credit-building strategies.
Secured credit cards
Most creditors may view you as a higher risk lender after bankruptcy. But you will also likely get a lot of offers in the mail. The goal is to apply for reasonable cards that do not have unnecessary fees. Right after your filing, you may need to stick to secured cards. A secured card allows you to submit an upfront deposit instead of borrowing against an unsecured line of credit. Deposits are usually around $200 to $500. Compare fees before making a deposit.
You do not even need your own credit card to start improving your credit score. You may be able to convince someone you know to add you as an authorized user on his or her account. This allows you to reap the benefits of this person's positive history and activity without taking on actual debt. Being an authorized user does not have as much of an influence as having your own card, but it can help you get a head start.
If you have trouble becoming an authorized user or getting a secured card, do not lose hope. Another option is getting a credit-builder loan. This type of loan is designed for people with no or poor credit. Credit-builder loans tend to be around $300 to $1,000.
No matter what type of credit you apply for, make sure the credit bureaus receive a report of your payments.