Secured Credit Cards for Rebuilding Credit after Bankruptcy

If you work hard, you can have excellent credit again after a bankruptcy. Even before the bankruptcy mark falls off your credit report, you can have a credit score of 750 again, if you begin working hard on your credit score immediately after your bankruptcy proceedings are over and you receive the discharge notice from bankruptcy court. You will need to show this discharge paperwork to creditors before you will be offered new credit lines.

One of the easiest ways to start reestablishing credit is with a secured credit card through a local bank or credit union. A “secured” card means that you give the bank or credit union an amount of money to hold, and they give you a credit limit equal to that amount. Unfortunately, many secured cards have extremely high up-front fees to open the credit line.

Before opening a secured credit card, you should ask whether the bank will report the card to all three major credit bureaus – Experian, Equifax and TransUnion. You should only open a secured card with a bank or credit union that reports your activity to all three of these bureaus. You should also find out how soon you can increase your limit on the card. Some banks will allow you to have secured cards up to $10,000. You would have to deposit the amount of money to increase your card’s limit, but the higher the limit and lower the balance, the faster you can improve your credit scores.

You should also be sure to find out if the bank or credit union will ultimately give you an unsecured credit card. Many banks or credit unions want to see at least one to two years of good payment history before they will offer an unsecured credit card. They should provide this information prior to opening the card. Be sure to consult a bankruptcy attorney to find out what are your options.