Bankruptcy Credit Card: How Choose One

There are many credit card issuers out there promoting what some people refer to as "bankruptcy credit cards" - that is, credit cards for people who have a bankruptcy on their credit report.

Of course, these credit card issuers target individuals with poor credit in general, not just those with bankruptcies - but for the purpose of this article, we will use the term "bankruptcy credit card".

Most of the bankruptcy credit cards you see advertised are secured credit cards. If you are not familiar with a secured credit card, it's "secured" by a special savings account you establish with the issuing bank which acts as collateral for the line of credit you receive with the bankruptcy credit card.

So how do you go about choosing a "secured" bankruptcy credit card? The first step is to come up with a list of criteria. In After Bankruptcy Credit Solutions I cover eight criteria you can use. When I apply the eight criteria, only a handful of bankruptcy credit cards are left - so it narrows it down to the better ones quickly.

There's not enough space here to cover all eight of the criteria I use when selecting a bankruptcy credit card, so let's focus on a few of them as a starting point:

1. Has Reasonable fees

What's reasonable? Well, while researching some bankruptcy credit card issuers I came across one that charged a $120 application fee. Compare this to a number of others that charge no application fee at all! But that's only part of the picture -you also want to make sure the bankruptcy credit card issuer offers an interest rate that is competitive with other issuers. This where comparison shopping, and making sure you are aware of every fee the card issuer charges, is critical.

2. Reports to the major credit reporting agencies

This is very important - if you want to rebuild your credit history, make sure the issuer of the bankruptcy credit card reports to the major credit reporting agencies: Experian, Equifax, and Trans Union. You also want to make sure the information is reported a certain way - in After Bankruptcy Credit Solutions, I go into detail on this.

3. Reports credit limits

Why is this important? If the bankruptcy credit card issuer does not report your credit limit, this could lower your credit score with some credit scoring models because they may automatically assume you are at your limit - even if you are using only 10% of the available credit line.

We've only touched on three of the eight criteria I cover in After Bankruptcy Credit Solutions. But, at the very least, it should give you a starting point when it comes to choosing a bankruptcy credit card.


Copyright © 2006 Innovative Solutions Publishing, Inc. All rights reserved.

The company and product/service names referenced in this article are the trademarks, registered trademarks or service marks of their respective owners. None of the owners have sponsored or endorsed this article.

DISCLAIMER:

This information is designed to provide only a general overview of the subject matter herein.

This information is provided with the understanding that neither the publisher nor author is engaged in rendering legal, accounting or other professional advice. If legal or other expert assistance is required, the services of a professional should be sought.

Neither the publisher nor author shall be liable for any loss or damages, including but not limited to special, consequential, incidental or other damages, caused by the information contained herein.

R. Lawrence Anderson is author of After Bankruptcy Credit Solutions, which shows individuals how to qualify for credit and loans after bankruptcy - including how to select a bankruptcy credit card.

Getting Credit Cards After Bankruptcy

It is not uncommon to go through the agony of facing a bankruptcy and spending many a sleepless night worrying about whether you have any chances of getting credit cards after bankruptcy. This might have been impossible earlier, but not now. Increasing market competition has ensured that there are now credit card providers who specialize in providing credit cards after bankruptcy.

It is not too difficult to get a credit card after bankruptcy from these kinds of credit card providers. The only hitch is that they take a higher interest rate and a lower credit limit. This is because of the risk that they are taking for offering a credit card after bankruptcy to a person.

It is not difficult to rebuild good credit after bankruptcy. In fact filing for bankruptcy in the court is a good move in itself. It might be a huge blow to your credit report but eventually it will prove to be a sensible move. Once you have eliminated debt by filing for bankruptcy you can make a new start by applying for bankruptcy credit card application. You should take care that you fill you bankruptcy credit card application properly. While filling up your bankruptcy credit card application make sure that all your paid expenses are shown as paid or else they would tag along and spoil your new credit report.

You can either opt for secured credit cards after bankruptcy or unsecured credit cards after bankruptcy. A secured credit card after bankruptcy is a wiser decision than an unsecured credit card. These are secured by special savings account one establishes with a credit card issuer which acts as a security for his credit limit. A unsecured credit card is exactly its opposite. Once you have opted for a secured or unsecured credit card after bankruptcy make sure that you build up a good credit report. Building up a good credit report is absolutely essential if you want to come to a good standing back again. For this, always pay your bills on time and also cut down your expenses to bare essentials. Another way to rebuild your credit after bankruptcy is to add years of positive credit history to your account. It is a slow and could be an agonizing process but once you build a good credit record, you will be in a different league altogether.

Credit cards after bankruptcy while on one hand may prove to be expensive, but then, they can help you secure a stronger footing in future with regards to your credit rating.

William King is the director of Wholesale Pages: http://www.wholesalepages.co.uk , Australia Wholesalers: http://www.australiawholesalers.com , Pakistan Real Estate & Pakistan Property: http://www.zameen.com , and Dubai Property & Dubai Real Estate in UAE: http://www.bayut.com . He has 18 years of experience in the marketing and trading industries and has been helping retailers, entrepreneurs and startups with their product sourcing, promotion, marketing and supply chain requirements.