If you’ve filed for chapter 7, this will show on your credit report for the next 10 years. Even chapter 13, where you repay some of your debt, will be recorded for 7 years. Credit card issuers perform a credit search so any past indiscretions will be revealed; declaring bankruptcy will normally lead to your application being declined.
Credit cards for bankrupts are available from specialist issuers, just not on the same terms that you’re used to. There are three main types of credit cards after bankruptcy: unsecured, secured and pre-paid cards. It’s simply a matter of deciding which one is most appropriate for you. They all have their relative pros and cons.
Unsecured Credit Cards for Discharged Bankrupts
An unsecured post bankruptcy credit card has a much lower credit limit and higher initial charges. Issuers don’t take any risks and deduct these charges from your limit. To get value, you’ll need to settle these fees prior to using your card. Extremely useful for making small purchases and rebuilding your credit score.
Your credit limit will be reviewed after 6 months, provided that you pay punctually and manage your account in accordance with the terms and conditions of the agreement. This illustrates that you’ll need to prove your creditworthiness before you’re able to enjoy a higher limit and lower APR.
Secured No Credit Check Credit Cards for Bankrupts
There isn’t any practical difference in the way unsecured and secured after bankruptcy credit cards work, but secured cards offer customers a far higher credit limit. Security either comes in the form of property, or more likely, a cash deposit that is held by the issuer to secure the debt.
Aside from a higher limit, you’ll also tend to find interest and charges are a lot lower. This is simply because the provision of collateral means that the issuer assumes a vastly reduced risk in the event of default. They’re also useful for rebuilding your credit rating so you qualify for mainstream cards in the future.
No Credit Check Pre-paid Credit Cards for Bankruptcy
Unlike secured or unsecured easy credit cards for bankrupts, you aren’t assigned a credit limit. This is because you need to load money onto your card via a bank transfer. You’ll pay a small charge for loading funds and some issuers also charge an annual fee. If you search the market, you’ll be able to avoid annual charges.
If you’ve got onto serious debt in the past, you should seriously consider a pre-paid credit card. Given that you’re using your own money, you can’t ever get into financial difficulties. They’re excellent for budgeting and money management. If they display the “credit builder” symbol, you’ll also be able to fix your credit score.