6 Best Credit Cards After Chapter 13 Bankruptcy

Best Credit Cards After Chapter 13 Bankruptcy
GUIDE
Eric Bank
By: Eric Bank
Updated: June 23, 2020

Chapter 13 bankruptcy is not the end of the world. Unlike Chapter 7, it is more about debt reorganization and less about debt forgiveness. Nonetheless, Chapter 13 bankruptcy sends your credit score plummeting, and it can take a decade or longer to fully recover from the blow.

One way to rebuild your credit is through the responsible use of future credit accounts. That begs the question: Which are the best credit cards after Chapter 13 bankruptcy?

In response, we review seven of the best credit cards that you can obtain despite a rocky financial history.

Unsecured | Secured | FAQs

Best Unsecured Cards After Chapter 13 Bankruptcy

Only a handful of unsecured credit cards welcome applicants who have endured a Chapter 13 bankruptcy. These include one retail card and three general-purpose cards.

Although they offer few perks and tight credit limits, these cards don’t require collateral and provide you with the opportunity to rebuild your credit by making timely payments.

  • Easy application! Get a credit decision in seconds.
  • Build your credit history – Fingerhut reports to all 3 major credit bureaus
  • Use your line of credit to shop thousands of items from great brands like Samsung, KitchenAid, and DeWalt
  • Not an access card
  • Click here for official site, terms, and details.
★★★★★

4.8

Overall Rating

Application Length Interest Rate Reports Monthly Reputation Score
5 Minutes See issuer website Yes 9.0/10

The Fingerhut Credit Account enables consumers to charge online purchases at the Fingerhut website. The account reports your payments to the three credit bureaus, thereby allowing you to rebuild your credit.

Note that the merchant may instead approve you for its Fingerhut Fresh Start Installment Loan — it will inform you once it decides. The credit account charges no annual fee and regularly offers deferred payments through special promotions.

  • Checking Account Required
  • Fast and easy application process; response provided in seconds
  • A genuine Visa credit card accepted by merchants nationwide across the USA and online
  • Manageable monthly payments
  • $300 credit limit (subject to available credit)
  • Reports monthly to all three major credit bureaus
  • Click here for official site, terms, and details.
★★★★★

4.7

Overall Rating

Application Length Interest Rate Reports Monthly Reputation Score
9 Minutes See terms Yes 8.5/10

If you want a genuine Visa card despite your less-than-perfect credit history, the Total Visa® Card is a solid choice. You need a checking account to receive this card, which charges a one-time application fee as well as an annual fee and a monthly processing charge that is waived for the first year.

You get to choose from six different card designs and can obtain a second card for an additional annual fee. The Bank of Missouri issues the Total Visa Card.

  • Checking Account Required
  • Reporting monthly to all three major credit reporting agencies
  • Perfect credit not required for approval; we may approve you when others won’t
  • Easy and secure online application
  • $300 credit limit (subject to available credit)
  • The First Access Visa Card is issued by The Bank of Missouri pursuant to a license from Visa U.S.A. Inc.
  • Click here for official site, terms, and details.
★★★★★

4.7

Overall Rating

Application Length Interest Rate Reports Monthly Reputation Score
10 Minutes See Terms Yes 8.0/10

Chapter 13 bankruptcy won’t necessarily disqualify you for the First Access Solid Black Visa Credit Card, but you must be at least 18 years old and reside in the United States. This genuine Visa card is also issued by the Bank of Missouri.

If approved, you will pay both a set-up charge and an annual fee. However, fees for cash advances and monthly servicing don’t kick in until the second year after you open the account.

  • See if you Pre-Qualify in less than 60 seconds—without affecting your credit score. It's fast, easy, and secure.
  • Get 1% cash back rewards on eligible purchases including gas, groceries, and services such as mobile phone, internet, cable and satellite TV. Terms apply.
  • This is a fully functional, unsecured credit card—not a debit card, prepaid card, or secured credit card with deposit requirements.
  • Credit One Bank evaluates every account for credit line increase opportunities. We'll let you know as soon as you're eligible for a higher credit line.
  • Take advantage of free online access to your Experian credit score and credit report summary so you can track the key factors impacting your credit health. Terms apply.
  • Zero Fraud Liability protects you if your card is ever lost or stolen. Rest easy knowing you won't be held responsible for unauthorized charges.
  • Access your account easily from your computer, smartphone, or tablet at CreditOneBank.com or the Credit One Bank Mobile App. You can make payments, see recent transactions, and update your account preferences all at the click of a button.
  • Carry a card that makes you smile by choosing from over 20 unique card designs in Credit One Bank’s card gallery. A fee may apply.
  • Click here for official site, terms, and details.
★★★★

4.3

Overall Rating

Application Length Interest Rate Reports Monthly Reputation Score
8 Minutes 17.99% - 23.99% Variable Yes 9.0/10

The Credit One Bank® Visa® with Free Credit Score Tracking is one of the few cards for bad credit that pays you cash back (specifically, unlimited 1% cash back) on all your purchases. Annual fees may apply, but there are no set-up charges or monthly processing fees.

This full-featured Visa card from Credit One Bank gives you free monthly access to your Experian credit score and automatic reviews for higher credit lines. You also receive timely notifications of transactions and payments, as well as free access to your credit score.

Best Secured Cards After Chapter 13 Bankruptcy

Secured credit cards are easier to obtain despite your past bankruptcies because you deposit an amount equal to your credit limit into a personal savings account. The deposit serves as collateral should you fail to make a payment on time, or your payment is below the minimum.

Secured cards generally have more favorable APRs because the deposited collateral reduces the issuer’s risk of not getting paid.

  • Invest your tax refund to improve your credit by making the refundable deposit for your new secured card today
  • Receive Your Card More Quickly with New Expedited Processing Option
  • No Credit History or Minimum Credit Score Required for Approval
  • Quick and Complete Online Application
  • Full-Feature Platinum Mastercard® Secured Credit Card
  • Nationwide Program though not yet available in NY, IA, AR, or WI *See Card Terms.
  • Apply in just a few moments with no negative impact to your credit score; no credit inquiry will be recorded in your credit bureau file
  • Click here for official site, terms, and details.
★★★

3.0

Overall Rating

Application Length Interest Rate Reports Monthly Reputation Score
9 minutes 19.99% (V) Yes 7.5/10

The First Progress Platinum Elite Mastercard®, issued by Synovus Bank, requires no minimum credit score or credit history for approval. It charges a variable-rate APR for purchases, an annual fee, and fees for foreign transactions, cash advances, and late or returned payments.

You must be a U.S. resident and at least 18 years old (19 in Nebraska and Alabama), but the card isn’t available in Arkansas, Iowa, New York, and Wisconsin.

  • Invest your tax refund to improve your credit by making the refundable deposit for your new secured card today
  • No Credit History or Minimum Credit Score Required for Approval
  • Monthly Reporting to all 3 Major Credit Bureaus to Establish Credit History
  • Credit Line Secured by Your Fully-Refundable Deposit of $200 -- $2,000 Submitted with Application
  • Nationwide Program though not yet available in NY, IA, AR, or WI *See Card Terms.
  • Apply in just a few moments with no negative impact to your credit score; no credit inquiry will be recorded in your credit bureau file
  • Click for for official site, terms, and details.
★★★

3.0

Overall Rating

Application Length Interest Rate Reports Monthly Reputation Score
8 minutes 9.99% (V) Yes 7.5/10

The First Progress Platinum Prestige Mastercard® is another secured card from Synovus Bank. It differs from the First Progress Platinum Elite Mastercard® in that it offers a lower variable APR but a higher annual fee.

Your credit limit matches your refundable deposit of $200 to $2,000. You submit the deposit with your application. All First Progress secured cards report your payments monthly to the three major credit bureaus, giving you the opportunity to improve your credit through on-time payments.

How Soon After Bankruptcy Can I Apply for Credit?

While you are not legally restricted from applying for credit after bankruptcy, the question is whether you should jump in right away or wait for a while. Part of the answer depends on the bankruptcy chapter you invoked.

Chapter 13 bankruptcy is a reorganization plan that gives you three to five years to repay some or all of your debts. You must make monthly repayments to a trustee that distributes the money to your creditors with approved claims.

Chapter 13 allows you to protect some of your property from creditors and stretch out your payment of attorney’s fees. After the repayment period ends, the remainder of the debts included in the reorganization plan is discharged (i.e., forgiven). During the repayment period, you are reducing your debt-to-income ratio and credit utilization ratio (CUR), which can start to heal your credit score.

The most prudent course of action is to avoid new credit until you close out the Chapter 13 repayment period. If you like the convenience of shopping with a credit card, we suggest instead using a prepaid or debit card.

If you try to take on new credit during the repayment period, you will be sending a negative signal to creditors indicating you are not taking your responsibilities under Chapter 13 seriously. That will only make it harder to rebuild your credit. If you want to rebuild your credit score, the most efficient strategy is likely to wait until your Chapter 13 bankruptcy debt is discharged.

Chapter 7 is a different kettle of fish. It provides an immediate discharge of debt and reduces your CUR to zero. The discharge will remain on your credit report for 10 years. Therefore, you really have no reason to wait to apply for new credit beyond the time it takes your credit reports to be updated, which can require up to three months.

We suggest you check your three credit reports after 90 days have elapsed to verify your debts have been wiped out. You can get free copies of your credit reports from AnnualCreditReport.com.

Credit Report Evaluation Infographic

However you file for bankruptcy, it’s smart to postpone new credit until you are confident you can pay your bills on time and in full.

How Long Does It Take to Rebuild Credit After Chapter 13?

A Chapter 13 bankruptcy remains on your credit report for seven years from the date of filing. However, the negative impact on your credit score begins to slowly evaporate over time. This is built into the FICO credit score model, which focuses on the newest information in your reports.

While there aren’t any hard and fast rules regarding the time it takes to start seeing an improvement in your credit after Chapter 13 bankruptcy, a reasonable period is six to 12 months after entering into your repayment period. Chapter 13 does not immediately wipe out your debt, which means you’ll have a non-zero CUR during the repayment period.

Your CUR declines as you send payments to the Chapter 13 trustee, a positive signal for your credit score. After the repayment period ends, your CUR from your bankruptcy debts will be zero.

If you want to rebuild your credit as quickly as possible, you should keep your CUR under 20%. Of course, you must also be vigilant in paying your bills on time and in full.

Credit Utilization Chart

Example chart of credit utilization across three credit cards.

You should regularly check your credit reports to verify your Chapter 13 repayments are being fully applied to your bankruptcy debts. Also, you should ensure that non-bankruptcy accounts aren’t mistakenly marked with a bankruptcy status.

It also makes sense to get a secured credit card as soon as possible after entering into your repayment plan. This will begin to rebuild your credit right away as long as you make your payments on time.

As you see your credit score rebounding, you may consider trading in your secured card for an unsecured one.

Will My Credit Score Increase After Bankruptcy Discharge?

There’s a good possibility you’ll see your credit score go up after a bankruptcy discharge since discharge occurs when you’ve finished repaying what you agreed to pay in Chapter 13 bankruptcy.

As we explained above, this wipes out your CUR, assuming you have no other debts. This can boost your credit score, but it is only one of the five components that impact your FICO score.

FICO Credit Score Factors

Let’s see how bankruptcy discharge affects each component:

  1. Payment history (35% of total score): The accounts discharged by your bankruptcy remain on your three credit reports for seven years. That’s a long time to endure a black eye. However, as mentioned earlier, the impact diminishes after a couple of years. That means the payment history component of your credit score should start helping you (or really, hurting you less) two or three years after the date of filing, assuming you don’t do anything during the period that further damages your credit.
  2. Amounts owed (30%): The discharge means the remaining debt on your accounts is paid. That immediately drops your CUR and therefore is a big positive for your credit score.
  3. Length of credit history (15%): As mentioned, the discharged accounts remain on your credit report for seven years. Normally, older accounts boost your score, but discharged accounts are a negative, not a positive. Until the discharged accounts are purged from the report, you should assume that they have a net negative impact on your score.
  4. Credit mix (10%): Your non-discharged credit mix will probably narrow after bankruptcy since you will find it difficult to get new credit for a while. Therefore, credit mix probably doesn’t help your credit score after a bankruptcy discharge.
  5. New credit (10%): We suggest you refrain from new credit during the Chapter 13 three-to-five-year payback period. Since new credit can hurt your score, you avoid this problem by waiting to apply for new credit. Once discharge occurs, it still makes sense to apply for new credit slowly, because filing many credit applications within a short period can significantly hurt your score.

Responsible credit management on your part will help you rebuild your credit as quickly as possible following bankruptcy discharge.

Bankruptcy May Be Only a Temporary Setback

Our review of the best credit cards after Chapter 13 bankruptcy identifies seven cards that will help you improve your credit score by reporting your payments to the three major credit bureaus. But your credit will only improve if you pay your bills in full and on time.

By doing so, your credit can improve when your bankruptcy debt is discharged. The bottom line is that Chapter 13 bankruptcy may be only a temporary setback from which you can recover if you adopt a responsible financial attitude.

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