Can I Improve Credit After a Bankruptcy?October 14, 2022
Filing for bankruptcy is a complex legal process that can damage your credit. Still, it can be a good solution to your debt problems because you get to put your finances in order and start rebuilding your credit. Even though the impact of bankruptcy decreases as time goes by, Can you get credit after bankruptcy?
Improving Credit After a Bankruptcy
Bankruptcy severely impacts your credit score, and it is important to exhaust other options before considering it. Filing bankruptcy means you will not pay covered debts in full as you had agreed with your lender. This record will always affect how lenders view you whenever you apply for loans in the future.
Chapter 7 bankruptcy liquidates your debt, and you will likely lose most of your properties but end up with a clean financial slate. On the negative side, Chapter 7 bankruptcy remains on your credit records and affects your credit score for 10 years,
Chapter 13 bankruptcy reorganizes your debts so that you get to keep your properties but are mandated to pay back some of the debts you owe. It also affects your credit score and shows up on your credit reports for 7 years.
Getting a credit card after bankruptcy is essential in helping you rebuild your finances through positive payment history in your credit reports. You will find it hard to qualify for a conventional credit card once you file for bankruptcy because lenders will always see that information in your credit report. However, not all hope is lost; you can seek credit cards designed for users with poor credit, which will help you to start building your credit.
How Soon Can You Apply for Credit After A bankruptcy?
Applying for a credit card while bankruptcy proceedings are in progress is impossible. However, once a bankruptcy is discharged, you will be free to apply for a credit card. The time it takes to complete the bankruptcy proceedings will determine how soon you can apply for credit.
How long it takes to get new credit also depends on whether you filed a Chapter 7 or Chapter 8 bankruptcy. A Chapter 7 bankruptcy takes 4 to 6 months for debts to be discharged, while a Chapter 13 will take between 3 to 5 years.
Can You Apply for a Secured Card?
Many people don’t realize they can apply for a secured credit card after filing for bankruptcy. In fact, there are several lenders who will approve you for a secured credit card even with a fresh bankruptcy. Some issuers won’t check your credit score and will still offer you credit with a blemished credit history. The credit limit for secured cards is equal to the amount of security deposit you put down when applying. For example, if you deposit $1500, your credit limit will be $1500.
However, you should keep in mind that most secured cards might have high fees and rates. Thus, it is important to read the fine print to know their rates and fees since your goal is to repair your credit score after bankruptcy.
Unsecured Credit Cards That Accept Bankruptcies
Here are some unsecured credit cards that accept bankruptcies
- Credit One Bank Platinum Visa
- Petal 2 Visa Credit Card (No fees)
- Credit One Bank Platinum Visa for Rebuilding Credit
- Applied Bank Unsecured Classic Visa
- Freedom Gold Credit Card
- Total Visa® Credit Card
- Surge Mastercard® Credit Card
When choosing unsecured credit cards, pay attention to recurring fees, annual fees, interest rates, hidden fees, and APRs, and choose one that costs less to own and get. You should also pay attention to how much initial deposit is needed and get cards with reasonable deposit requirements.
How Can You Get an 800 Credit Score after Bankruptcy?
Bankruptcy does not mean doom in your finances. On the contrary, it offers you a clean slate so you can take charge of your finances. Time and effort are needed on your part to have a good credit score.
To rebuild your creditworthiness and get an 800 credit score, you should:
- Pay your bills on time- Every positive payment is reported on your credit report and goes towards building your score.
- Monitor your score- Obtain a copy of your credit report to see your score
- Have a spending strategy- Spending wisely will help you avoid accruing debts
- Pay your student loan diligently- Student loans are not discharged through bankruptcy, and thus essential that you keep paying on time for a positive credit rating.
- Get financial advice from reputable credit repair companies.
Bankruptcy can be tough on your credit report, but it doesn’t mean it’s the end of the road for you. It’s possible to get unsecured credit cards that accept bankruptcies because most companies will still offer you credit after bankruptcy. When you get your credit after bankruptcy, remember that your payment history is the most important factor in your credit repair efforts after bankruptcy.
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