Should I Get a Credit Card After Bankruptcy?

Credit card terminal (POS-terminal) for payment
Credit card after bankruptcy

Once you file Chapter 7 bankruptcy, you will be flooded with new credit card offers. It may seem counter-intuitive, but you should get a credit card after bankruptcy.

Credit card companies are not doing you a favor. Once you receive a bankruptcy discharge, you actually become an excellent credit risk. After all, you have zero debt, and you can’t declare another Chapter 7 for eight years. I get the question from clients all the time: “Should I get a credit card after bankruptcy?”

Yes, you should get a credit card after bankruptcy

One of the very best ways to improve your credit score post-bankruptcy is getting a credit card. And you must also use it. Try to get one as soon as possible after receiving your discharge. Be sure to compare the rates and fees of the offers you receive. You should shop around online, too.

By using your credit card, instead of cash, then paying off the balance each month, you will get the beneficial reporting to credit bureaus that you pay your credit card balances on time. Not missing a payment is crucial here.

If your credit history does not allow you to get an unsecured card, then get a secured card. Be sure to find a secured card that actually reports to credit bureaus. You may have to check with the issuing bank to ensure that they will report. After a few months of responsible usage on a secured card, many companies will allow you to switch to an unsecured card, or will issue you an additional card.

Careful how you use your credit card

You should try not to carry a balance because interest rates, post-discharge, will be quite high. Charge only what you know you will be able to pay off in full each month. Be sure to make at least the minimum payment, or your report will be dinged. Remember, the whole point is to get month after month of on-time payments reported to the credit bureaus, TransUnion, Equifax, and Experian.

Learn to trust yourself again

The only reason not to get a credit card after bankruptcy is if you feel you lack the self-control to pay off the balance each month. You have to learn to trust yourself again, to trust your self-discipline.

Most of the clients that I represent are hard-working people who filed bankruptcy because of unforeseen circumstances, such as loss of income, divorce, or medical problems. For even those clients who were forced into bankruptcy due to overspending, by the time they are finished with the bankruptcy process, most have “learned their lesson.” So there is no sense in foregoing the positive effects on credit that timely payments to a credit card can have.

About Brian V. Lee 390 Articles
Brian V. Lee provides bankruptcy, foreclosure defense, business turnaround, and litigation services to clients in the District of Columbia, Virginia, and Maryland. Brian was the Washington, D.C. state chair of the National Association of Consumer Bankruptcy Attorneys from 2016 to 2018.