Can I still get credit cards or a loan after bankruptcy?

Find the financing you need even with rock-bottom bad credit.

You might think that if you credit is scraping-the-bottom-of-the-credit-score-barrel-bad because of bankruptcy that there’s no way you’ll ever find someone who will approve financing for you – whether it’s a credit card or a loan.

Silly consumer with your conservative lending logic.

Of course there are ways you can get financing! There are plenty of lenders and creditors that are absolutely willing to take the risk and give you the line of credit you want. But the bigger question is, should you really be going for these types of financing or are you just setting yourself up for another round in bankruptcy court?

Finding a good credit card with a bad credit score

First, don’t go for traditional credit cards right after bankruptcy – you either won’t get approved or you’ll face interest rates that are so high it would be ridiculous to charge anything because it’s only asking for trouble.

But there is one type of credit card specifically designed for people who have bad credit – secured credit card. This card offers lower interest even if you have bad credit, because you secure the credit line with a deposit. Since the creditor has a way to recoup their losses if you don’t pay, you can get approved even if you have the worst credit score possible.

Fact: A secured credit card helps you build credit, unlike a prepaid card that acts more like a debit card and doesn’t build credit.

You’ll need a deposit amount – usually around $400-$500 to open the account. Then you can use this card to rebuild your credit. Once your score is high enough, you can qualify for traditional lines of credit at higher credit limits.

Taking out a loan after bankruptcy

Loans can be a little tougher to qualify for than a credit card. And while there are secured loans that you can get approved for, it’s usually not worth the risk to the collateral they ask you to put up.

Loans are usually secured with physical collateral – like a home equity loan where you borrow against the value of your home to get money. This is a bad idea. If you fail to pay back the loan, the bank can foreclose on your home. So it’s almost always not worth the risk.

But that doesn’t mean that you can’t find a loan that will work for your finances right after bankruptcy. Although how difficult it is to get approved is usually directly related to how much you’re borrowing. A small personal loan is easier to take out than an auto loan, which in turn is much easier to get approval on compared to a mortgage.

In any case, you can usually find lenders who are willing to work with high-risk (bad credit) borrowers. Just make sure they’re not tacking on lots of extra fees and hidden add-ons that drive up your costs to maximize their profits. Even a loan for bad credit can be a good loan as long as you can maintain the payment schedule.