Secured Credit Cards

A question that commonly comes up with clients is how to raise a credit score after filing bankruptcy.  If you keep a vehicle loan or mortgage after your case is done those creditors will continue to report your payments.  But what if you don’t have either of these loans?  Consider secured credit cards.  In my opinion the best alternative to consider is obtaining a secured credit card.

Secured Credit Cards Require an Initial Deposit

Just like renting an apartment and putting money down for a security deposit, secured credit cards will require some type of deposit.  This is required in case you fail to make a payment on the card.  Typically you will need a security deposit between $40 – $200.  It all depends on the card issuer and the balance they approve you for.

Reporting to the Credit Bureaus

A secured credit card operates just like all of your other credit cards.  You charge items, you receive a monthly bill, and you are responsible for paying the bill.  The nice aspect of secured cards versus prepaid debit cards is that secured cards report information to the credit bureaus.  This payment history will help you re-establish your credit score.

Different Aspects to Consider

You want to make sure you apply with a reputable bank and not just the first secured card application you find.  There are still those companies that target vulnerable individuals.  Additionally, you want apply for a card with a low annual fee and a low interest rate.  Sometimes you do not have the power to decide this aspect, but lower is better for both.  Finally, look around and make sure the card you apply for is the right fit for you.  Not every bank will issue a secured card to someone that just filed bankruptcy.  Some banks will require you to have a discharge granted before approving you.