Writer: Ashley Fricker
Editor: Lillian Guevara-Castro
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Some of life’s setbacks can be impossible to overcome. Fortunately, bankruptcy is not one of them. In fact, for many people in extreme debt, bankruptcy can actually be the first step to repairing your credit for two important reasons:
- Bankruptcy can reduce or wipe out your debt. Since you now have less (or no) debt, you are in an excellent position to repay the next debt you take on.
- Creditors know you will be willing to pay high interest rates to rebuild credit, and many are happy to offer you their products, which are often the most profitable for the bank.
There are several ways to restore your credit rating after bankruptcy. For example, credit unions offer credit builder loans that can rebuild your credit rating over the course of a year or two. The most feasible method is usually to obtain a credit card, secured or unsecured, and use it responsibly.
After six months or so, you should see your credit score start to improve. Keep reading for a selection of what we believe to be the best post-bankruptcy credit cards available today and learn how to use these cards for a fresh start and a fresh credit score.
Unsecured | Secured | Post-Bankruptcy Advice
Best Unsecured Cards For After a Bankruptcy
An unsecured credit card is one that is not backed by a cash deposit. Even if you are just coming out of bankruptcy, you may be able to procure an unsecured card, but be prepared for a high interest rate, high fees, and a low credit limit. But that’s OK; consider it the price of regaining your credit rating.
We’ve evaluated just about every unsecured credit card geared toward those consumers who need to rebuild their credit ratings, and here are some of the best:
- Up to $1,000 Initial Credit Limit
- See if you Pre-Qualify with No Impact to your Credit Score
- Less than perfect credit? We understand. The Surge Mastercard is ideal for people looking to rebuild their credit.
- Unsecured credit card requires No Security Deposit
- Perfect card for everyday purchases and unexpected expenses
- Monthly reporting to the three major credit bureaus
- Use your card everywhere Mastercard is accepted at millions of locations
- Enjoy peace of mind with Mastercard Zero Liability Protection for unauthorized purchases (subject to Mastercard guidelines)
- Apply with Confidence! There is no impact to your credit score if you’re not approved. See terms.
| Application Length | Interest Rate | Reports Monthly | Reputation Score |
|---|---|---|---|
| 5 minutes | 35.90% Fixed | Yes | 8.5/10 |
- Guaranteed $700 credit limit if approved.
- Apply with Confidence! There is no impact to your credit score if you’re not approved. See terms.
- Don't Have Perfect Credit? No Problem!
- Join over a million consumers who are working on building their access to credit.
- Zero Fraud Liability - Peace of mind that comes with having a Mastercard.
- Get the credit you deserve, even with less-than-perfect history.
- No security deposit, and a path to better credit.
| Application Length | Interest Rate | Reports Monthly | Reputation Score |
|---|---|---|---|
| 8 minutes | See terms | Yes | 9.0/10 |
- Get the credit limit you deserve—$700 guaranteed if approved
- Apply with Confidence! There is no impact to your credit score if you’re not approved. See terms.
- Get the credit you deserve, even with less-than-perfect history.
- Trusted by more than a million customers with reporting to all three major credit bureaus so you get credit for all of your hard work.
- Zero Fraud Liability - Peace of mind that comes with having a Mastercard.
- Don't Have Perfect Credit? No Problem!
- No security deposit, just purchasing power.
| Application Length | Interest Rate | Reports Monthly | Reputation Score |
|---|---|---|---|
| 3 minutes | 35.9% | Yes | 9.0/10 |
Your strategy should be to pay off your balance each month to avoid interest charges. Avoid tapping more than 30% of your available credit limit to maintain a healthy credit utilization, and never miss a payment due date.
Best Secured Cards For After a Bankruptcy
A secured credit card requires you to deposit funds in an account that acts as collateral for your card balance. The deposit is usually equal to or greater than your card’s credit limit, and you can’t withdraw the deposit unless you either decide to close the credit card or are upgraded to an unsecured card.
You might choose a secured card if you can’t qualify for an unsecured one or if you want to pay a lower interest rate than that charged on unsecured cards. These are our three top picks for a secured card:
- No minimum balance requirements*
- No credit check**
- 2% cash back on category of choice with direct deposit***
- The perks of credit building meet the best of banking****
- Chime Checking Account required to apply for the Chime Visa® Credit Card
- Chime is a financial technology company, not a bank. Banking services provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC. The secured Chime Visa® Credit Card is issued by The Bancorp Bank, N.A. or Stride Bank, N.A. pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa credit cards are accepted. Please see the back of your Card for its issuing bank. *Money added to Chime CardTM will be held in a secured deposit account as collateral for your Chime Card, and you can spend up to this amount. You can use money deposited in your Secured Deposit Account to pay off your charges at the end of every month. **Out-of-network ATM withdrawal and over the counter advance fees may apply. ***With a qualifying direct deposit, earn 2% cash back on category of choice on eligible secured Chime Visa® Credit Card purchases. ****On-time payment history may have a positive impact on your credit score. Late payment may negatively impact your credit score. Results may vary.
| Application Length | Interest Rate | Reports Monthly | Reputation Score |
|---|---|---|---|
| 5 minutes | N/A | Yes | 9.5 |
- The secured Self Visa® Credit Card* requires no credit check or minimum score.
- Reports to all 3 major credit bureaus to establish and build credit, with free access to your credit score.
- Secure your credit line with a refundable security deposit as low as $100.**
- Deposits are returned upon account closure after settling outstanding balances.
- *The secured Self Visa® Credit Card is issued by Lead Bank, Sunrise Banks, N.A., or First Century Bank, N.A., each Member FDIC.
- **Qualification for the secured Self Visa® Credit Card is based on meeting eligibility requirements, including income and expense requirements and establishment of security interest. Criteria subject to change.
| Application Length | Interest Rate | Reports Monthly | Reputation Score |
|---|---|---|---|
| 3+ minutes | 27.49% Variable APR | Yes | 9.5/10 |
- Earn up to 10% cash back on everyday purchases
- No credit check required – 89% approval rate with zero credit risk to apply!
- Boost your credit score fast—2 out of 3 opensky® cardholders see an average increase of 47 points after 6 months
- Track your progress with free access to your FICO® score in our mobile app
- Build your credit history with reporting to all three major credit bureaus: Experian, Equifax, and TransUnion
- Seamless payments—add your card to Apple Pay, Google Pay, and Samsung Pay
- Start with just $200—secure your credit line with a refundable deposit
- Fast and easy application—apply in minutes with our mobile-first experience
- Flexible payment options—pick a due date that works for you
- More time to fund—spread your security deposit over 60 days with layaway
- Join 1.6 million+ cardholders who have used opensky® to build better credit!
| Application Length | Interest Rate | Reports Monthly | Reputation Score |
|---|---|---|---|
| 9 minutes | 23.89% (variable) | Yes | 7.0/10 |
The nice thing about a secured card is that the deposit is refundable — you can’t say the same for the annual fees and other fees charged by unsecured cards.
Restoring Credit After Chapter 7 or Chapter 13 Bankruptcy
Chapter 7 bankruptcy liquidates your debt, but you may lose most of your property in the process. In a way, Chapter 7 cleans the financial slate, although the black mark remains on your credit report for many years.
Chapter 13 bankruptcy reorganizes your debt, which means you are expected to pay back at least some of it. In return, you get to keep your property.
Under Chapter 13, secured credit cards receive preferential treatment over unsecured cards, which means you have to pay off your secured cards first, along with other collateralized debts, like your home and car loans. Here are some tips for restoring your credit after bankruptcy:
- Review your credit reports: You can get free copies of all three reports once a year on AnnualCreditReport.com. Go through each one to find any mistakes, which you can rectify by following the procedures set out by each of the credit bureaus. You can also add comments to explain your side of any issues.
- Open one or two credit accounts: We’ve mentioned credit building accounts from credit unions and secured/unsecured credit cards. Even if you are allowed to open multiple accounts, go slow — the credit bureaus will mark you down for opening too many accounts all at once. Be scrupulous about making your payments on time every month.
- Pay down debt: If you underwent a Chapter 13 bankruptcy, pay down your leftover debts as quickly as possible. The sooner you repay them, the sooner your credit rating will begin to recover. For new credit cards, don’t pay the full balance each month; rather, pay down your balances on a rolling two-month schedule. Sure, you’ll be paying interest, but you’ll also be restoring your creditor’s confidence in your creditworthiness.
Credit cards are a primary tool for restoring your credit rating following a bankruptcy. The cards we’ve listed in this article will provide you with the best deals and the greatest access to credit. Use your cards responsibly, and over time you’ll reestablish your financial reputation.
Photo credits: totaldebtnet.com
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