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Ask Creditnet: Credit Card Options After Bankruptcy

Dear Creditnet: My FICO score has climbed to 668 after going through a bankruptcy in 2008, and now I'm looking to improve my credit even more by getting an unsecured credit card. However, I don’t want to apply and hurt my score if I'll just get an automatic rejection due to the bankruptcy. I know that I can probably go through Orchard Bank (HSBC) for an unsecured credit card, but are there are other viable options?

Answer: Yes, there are definitely other options to consider. Your FICO score is now in the "fair credit" range, which means you don't necessarily need to limit your search to credit cards for bad credit. Capital One, for example, offers several great credit cards for fair credit that you might want to check out as well. Of course, there are no guarantees of approval when applying for any credit card, but with FICO scores pushing 700 I think your chances of approval are relatively good. It may be worth a try, and even if you do get denied, the hit to your credit scores would be minor and temporary. Expect a drop of around 5 points from a hard inquiry, and then your scores should bounce back again after several months. Before you make a final decision on which unsecured card might be the best fit, have you thought about going the secured credit card route instead?

Secured cards require a deposit that serves as your credit line, but they also keep you from spending more money than you have. If excessive spending was a problem you've had in the past, I would say this is definitely the best route take as you seek to rebuild your credit. Many secured credit cards offer guaranteed approvals and also report your payment history to the major credit bureaus, which makes them an excellent and safe way to get back in the credit game, build positive payment history, and improve your FICO scores. Then again, if overspending isn't an issue and you're willing to take the risk to see if you can get approved for a fair credit credit card, go for it. Fair credit credit cards generally come with lower annual fees, lower interest rates, higher credit limits, and even rewards programs, which make them a more appealing alternative to secured cards or other unsecured credit cards for people with bad credit. 

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Joshua Heckathorn's picture

Joshua Heckathorn was President of Creditnet, is a credit expert and has been featured on CNNMoney, FOX Business, Yahoo Finance, The Street, and many other national publications during the past ten years.  He received a Bachelor of Science in Management (Finance) from Brigham Young University's Marriott School of Business and earned his MBA from Seattle University.

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Chuck's picture

A secured credit card was by far the best move to make when in the credit building process. Both my wife and I used it to build credit after our bankruptcy six years ago. We now have great credit again and refinanced our home to a little under 5%.