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There are many credit card issuers out there promoting what some
people refer to as "bankruptcy credit cards" - that is, credit
cards for people who have a bankruptcy on their credit report.
Of course, these credit card issuers target individuals with
poor credit in general, not just those with bankruptcies - but
for the purpose of this article, we will use the term
"bankruptcy credit card".
Most of the bankruptcy credit cards you see advertised are
secured credit cards. If you are not familiar with a secured
credit card, it's "secured" by a special savings account you
establish with the issuing bank which acts as collateral for the
line of credit you receive with the bankruptcy credit card.
So how do you go about choosing a "secured" bankruptcy credit
card? The first step is to come up with a list of criteria. In
After Bankruptcy Credit Solutions I cover eight criteria you can
use. When I apply the eight criteria, only a handful of
bankruptcy credit cards are left - so it narrows it down to the
better ones quickly.
There's not enough space here to cover all eight of the criteria
I use when selecting a bankruptcy credit card, so let's focus on
a few of them as a starting point:
1. Has Reasonable fees
What's reasonable? Well, while researching some bankruptcy
credit card issuers I came across one that charged a $120
application fee. Compare this to a number of others that charge
no application fee at all! But that's only part of the picture
-you also want to make sure the bankruptcy credit card issuer
offers an interest rate that is competitive with other issuers.
This where comparison shopping, and making sure you are aware of
every fee the card issuer charges, is critical.
2. Reports to the major credit reporting agencies
This is very important - if you want to rebuild your credit
history, make sure the issuer of the bankruptcy credit card
reports to the major credit reporting agencies: Experian,
Equifax, and Trans Union. You also want to make sure the
information is reported a certain way - in After Bankruptcy
Credit Solutions, I go into detail on this.
3. Reports credit limits
Why is this important? If the bankruptcy credit card issuer does
not report your credit limit, this could lower your credit score
with some credit scoring models because they may automatically
assume you are at your limit - even if you are using only 10% of
the available credit line.
We've only touched on three of the eight criteria I cover in
After Bankruptcy Credit Solutions. But, at the very least, it
should give you a starting point when it comes to choosing a
bankruptcy credit card.
Copyright © 2006 Innovative Solutions Publishing, Inc. All
rights reserved.
The company and product/service names referenced in this article
are the trademarks, registered trademarks or service marks of
their respective owners. None of the owners have sponsored or
endorsed this article.
DISCLAIMER:
This information is designed to provide only a general overview
of the subject matter herein.
This information is provided with the understanding that neither
the publisher nor author is engaged in rendering legal,
accounting or other professional advice. If legal or other
expert assistance is required, the services of a professional
should be sought.
Neither the publisher nor author shall be liable for any loss or
damages, including but not limited to special, consequential,
incidental or other damages, caused by the information contained
herein.
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