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Bankruptcy Credit Card: How Choose One
By: R. Lawrence Anderson
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.
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.
About the Author:
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. |
