Best Credit Card After Bankruptcy
Q: I just came out my bankruptcy last September. What is the best credit card after you have a BK on file?
A: Thanks for your email Mike. With today’s economy, unfortunately bankruptcy has been almost inevitable for quite a few people in America. Whether it’s due to a job loss or catastrophic medical bills, it’s a very real scenario that most of us are susceptible to. So please don’t beat yourself up over it, because the odds are you were not at fault. So instead of dwelling on the past, try and focus on making a better future.
Are Credit Cards After Bankruptcy Possible?
So is there such thing as a best credit card after bankruptcy? Well even during a prosperous economy, lenders are extremely hesitant to do business with someone that has had a recent bankruptcy. In fact, some lenders like American Express are rumored to blacklist applicants altogether if their current credit report still shows a bankruptcy on it (however the bankruptcy is no longer being reported, it may be possible to apply). Anyway long story short is that it’s an uphill battle during good times, and an even greater battle during bad times. But credit cards after bankruptcy are possible if you play your cards right, literally 
Secured vs. Unsecured
A secured credit card involves putting up collateral (typically cash) and you can then borrow against that amount. For example, you would deposit $500 with the issuer and that would allow you to charge up to $500 on the card. Down the road when you are ready to close the account you will get back your full deposit, assuming you don’t have a balance.
An unsecured credit card is what we typically think of as a normal credit card – something that allows you to make charges without any collateral/deposit. As you can imagine, almost any unsecured credit card application you fill out after a bankruptcy will almost certainly be declined. So that means the best credit card after bankruptcy will most likely be some sort of secured credit card… simply because that’s about the only thing you will be able to get approved for at first, regardless of whether you had a chapter 7, chapter 11, or chapter 13 bankruptcy.
Tips For When You Apply For a Secured Credit Card
There are a lot of shady companies out there that try and take advantage of people when they’re applying for credit cards after bankruptcy. So here are a couple tips to follow to make sure you don’t get ripped off:
Reasonable Fees & Rates: Because they know you have few options, some issuers will try and price gouge you with outrageously high fees that will cost you hundreds per year. Play close attention to the application fees, annual fees, and interest rates. Ideally, you want them as low as possible. Most charge monthly and/or annual fees and unfortunately you will need to be prepared to pay $100 to $150 over the course of your first year.
Credit Bureau Reporting: Did you know that all banks/lenders have to actually pay to report a customer’s credit history to the bureaus? Because of this, some unscrupulous secured credit cards will try and save a few bucks by not even reporting their customers to the bureaus… essentially making their cards useless! So please be sure when you apply for secured credit card that it actually will be reporting your account.
The Best Credit Card After Bankruptcy Currently Available
For over two years in a row this card from our sponsor HSBC has been rated as the #1 most popular choice following bankruptcy:
We are almost 4 yrs. out discharged BK… rebuilt credit with Orchard (HSBC), Best Buy (HSBC) and Chase (which was a WAMU card before acquisition) and just recently, bought a house in December with an FHA loan. Middle Credit score in the 710-720. It can be done. All our CC are low limits ($500 & $1700).
Here’s my question…I need to purchase airline tickets and was thinking of applying through Chase, Citi or BofA. I think Chase might deny… Southwest application states if there is a BK on record…any thoughts on Citi? Capital One pre-approved for the Platinum card but I need at least $800 for the flights.
Thoughts?
Glad to hear of your success in rebuilding, Darlene!
As far as the issuers you asked about, here are the ones I would recommend:
Chase: The Chase Slate is probably the easiest to qualify for.
Citi: Same can be said about the Citi Platinum Select
Keep in mind though these cards don’t offer cash back/points, so they’re not the best credit cards out there. But if you’re just looking for something to take you to the next step, then they can make sense.
On your current Chase card, what is the credit limit? You may want to call them up and ask if they will increase it for you w/o a hard pull. I would try that before applying for a new card. But if they require a hard pull, then just apply for a new card instead.
Hello. I filed Bk and was discharged about 2 years ago, but since then am rebuilding my credit with excellent results. I have a credit score in the high 600s. I got a Pre-selected offer in the mail from HSBC for an unsecured CC. with a 0 percent introductory rate. I want to apply for this card but am nervous because in my Bk, I did include a HSBC CC. and am afraid that even though I am pre-approved that they will still turn me down and I will get an Inquire. Is HSBC known to give second chances?
Yes I did the same with HSBC (orchard) and capitol one and extended credit for second chance but the limit wasn’t high but it is a start.
Hi Sweet, thanks for the reply. Your right, I did apply on-line and was approved. and like you said–it is a start.
Hi, I filed in June 2010 so going on 2 yrs. I’ve tried to apply for furniture store credit and have been denied as recently as today 1/25/12.
I’m afraid to keep applying to things and hurting my credit that way.
Any advice? I don’t seem to be getting approved by anyone… I’m getting very discouraged.
Thanks for your time.
Hi Jenn, I’m sorry to hear that! You should be able to get approved for the card I mention at the end of the article – the secured version practically anyone can get. If you click on the link it will take you to a page where you can check if you are pre-approved without a hard credit inquiry. If you apply for an offer you are pre-approved for, then there might be an inquiry but at least it won’t be in vain since you already checked your pre-qualification.
Good luck!
Hi Jenn, Credit one bank should approve you. Go to their website and they have a pre-approval process which won’t be a hard inquire. They explain everything on their website. It is an unsecured card and they do credit increases but there is a yearly fee
I declared bankruptcy in November 2011 and I’m anxious to start improving my credit score. I’m told the best way to do this is get a credit card and make timely payments. The only problem is, I included credit cards from Orchard, First Premier & Capital One in my bankruptcty. I’m assumming I’ll be declined if I apply again with them. Are there any other banks (other than those three) that offer unsecured credit cards to people with bad credit? Any other ways to start improving my credit score? My goal is to be able to buy a house in 1-2 years.
Why deal with some credit card company 2 or 3 states away when you can go into your local banks and get a secured credit card from someone who is likely to know you? If you get one from the bank you currently use, you already have some value to the institution; to me it makes sense to get a card from the ‘bank just down the street’. I, like thousands of others in the last few years, have had a set of unfortunate circumstances; there are 3 banks within 2 miles of my home that will give me a secured card at a good rate. Both of them will consider converting it to unsecured with 12 months of proper payments. Sure, the beginning interest rate is a point or two too high….live with it until you prove yourself to them. Once you have a decent score and have your finances in order, you will have more credit extended to you than you should take.
ken if you have rc wiley out there they will out of bk
My Credit was ruined after selling my Dental Clinic & Building for $2.75 million. I only had outstanding mortgage & loans & credit card bills totaling $750K ($70K) in Credit cards which were not past due. After I paid everything the owners used my EIN# (fraud) and cashed my Accounts receivables and threw away my accounts payable. This Fraud was recognized by the National Practionaire Data Bank and I was issued a new #,which is like a social security # to Dentists. The O.C.C is reviewing my case and the hundreds of thousands of checks Valley national allowed these crooks to cash with my name and my TIN ,NPI#.I am now disabled due to P.T.S.D on $7,800 a month disability. Do I claim Bankruptcy or use my Disability (Temporary) to Discharge my Debt?
Sorry to hear about that Marc. Unfortunately I would have to say your best bet would be to speak with an attorney who specializes in that type of unique situation.
HSBC will not give me a credit card! I had one that I paid off and did not include in my BK before I even did the bankruptcy and I’ve applied twice (every 12 months) and my BK was discharged 3 yrs ago and they still gave me the excuse of the BK. Obviously if HSBC is your sponsor, they are number 1 on your list DUHHH
Hi Fabian, that is because all other HSBC credit cards require good credit – they will not approve you after bankruptcy or with bad credit. Only their Orchard Bank division has cards for bad credit.
The secured version for Orchard has no credit score requirement and is essentially guaranteed (as long are you meet the basic requirements like having a valid mailing address and being 18+).
CreditCardForum advertises almost all major credit card issuers and there are other secured cards that could be promoted here that would be a lot more lucrative. The reason Orchard is my top pick is because (1) low fees, (2) low minimum deposit, (3) only issuer to check your pre-qualification for multiple cards, both secured and unsecured, at the same time when you use the link above. If you don’t think you can get this HSBC card, I challenge you to check and prove me wrong.
Hello,
Just some news about a bankruptcy. My wife and i had to file in March 2009, discharged in Oct of 09.We are 65 year old seniors and this is not easy
We have been approve for a unsecured Capital one. My wife and i both have furniture accounts, where we have them with a 12 month interest free. We also our mortgage for 6 years and have never been late. We are doing great so far but finding it very impossible to get our home refinanced. We are looking to get a retail store credit card but do not know which one to select. We worry about applying for to many that many lower our FICO score. any advice. Thank You.
Hi Ken, sorry to hear of your troubles. As far as the best store card (that’s easiest to get) I would recommend asking on the forum to see what others say. You are far enough out from bankruptcy that your credit should be rebuilding nicely as long as you have a few accounts and manage them optimally. Good luck!
Should you apply for a secured card from a bank that was on your bankruptcy list?
Typically not, unless your BK was a few years ago.