Credit cards after bankruptcy

Credit cards, like most other types of debt are harder to find after bankruptcy.  However they are not impossible, and there are always some ways of getting credit cards although they will are likely to have higher interest rates and less attractive terms than standard credit cards.

Bankruptcies show up on credit reports, so stopping people getting credit cards and other forms of credit.  Although bankruptcy is a big stain on a credit score, credit scores still look at other indications of ability to pay.  This means that a bankrupt person with other indications that they may be a good credit risk in the future may be given a credit card, for example they may have a steady job.  

There are specialist providers who will provide credit cards to bankrupts.   These tend to have far higher interest rates and lower credit limits than other cards.

There are low credit score cards that aren’t aimed specifically at people who’ve gone through bankruptcy.  They are not going to be very easy to find, especially in the first couple of years after bankruptcy, but they are available even if they are not as common as they were in the years before the credit crunch.

The most important thing to do is to start rebuilding credit, and this is essentially done by getting small amounts of debt and paying off the debt diligently.  This behaviour is reported to the credit reporting agencies and so starts to appear on credit scores.  Building up credit is a very slow process but one that is worth the effort.  After a reasonably short time the credit score will start to improve.

There are a number of credit cards that are advertised as having “acceptance guaranteed” and these are open to ex-bankrupts as much as anyone else.  However they are rarely the same as a standard card, in these cases the credit card is either secured or prepaid.

Secured credit cards do build up credit balances in the same way as ordinary credit cards, but the balance is either partially or wholly secured by another asset, usually either a cash deposit or a house.  These will usually be able to build up a credit rating after about twelve months of the credit card balance being dutifully paid off.  It is a good idea to make sure that the balance on the credit card is not built up quickly.

Prepaid credit cards are also a way of getting some of the payment advantages of credit cards.  They are not usually counted for credit references due to the fact that they are prepaid and not credit based.