If you are like most people who file bankruptcy, one concern you have is how to re-establish your credit score. One of the more effective and sensible ways of doing so is with a secured credit card.
A secured credit card is called that because it is secured by cash that you deposit with the card issuer. For example, if you apply for a secured credit card with a limit of $1,000, you must deposit $1,000 with the card issuer. In the event you default on the credit card, the issuer can take your deposit and apply it against the balance you owe.
While it would seem like anyone who has cash to secure such a credit card would be able to get one, not all card issuers agree. The New York Times has a rundown on various issuers and their policies regarding customers who have recently filed bankruptcy.
Citibank. It depends on the individual’s situation, said Sean Kevelighan, a Citi spokesman. He declined to disclose the factors that it considers when making credit decisions.
HSBC. Applicants who provide a security deposit get approved, unless a background check with the credit bureaus turns up a discrepancy related to the identity of the applicant. Recent bankruptcies do not make you ineligible, and credit scores are not a factor in the company’s decision. Capital One. If the courts have discharged your debts, an applicant would be immediately eligible for a secured card. Capital One also considers the applicant’s ability to repay. “Our goal is to provide reasonable access to credit with the appropriate guardrails in place,” said Sukhi Sahni, a spokeswoman for Capital One.
Bank of America. Generally speaking, applicants must be out of bankruptcy for a year, and must have another relationship with the bank, like a checking account. Delinquencies on other accounts are also likely to result in a denial. “Over time, we would want to see that they demonstrate the ability to manage their finances responsibly because ultimately the goal is to graduate them to a nonsecured card,” said Betty Riess, a spokeswoman for Bank of America.
Wells Fargo. Applicants must be out of bankruptcy for a year. The bank also looks at a variety of other factors, including FICO credit scores and payment history. Wells Fargo only issues credit cards to current bank customers as a general policy.
U.S. Bank. The bank declined to comment.
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Secured credit cards are sensible in that they limit your ability to borrow, since overextending yourself may have been how you ended up needing to file for bankruptcy in the first place. Bankruptcy is not without sacrifice, and limiting your borrowing and buying is going to be one of those sacrifices.