Category Archives: Credit and Filing Bankruptcy

What Are The Best Credit Cards To Rebuild Credit After Filing Bankruptcy?

By Ryan C. Wood

The best credit cards to rebuild credit after filing bankruptcy are secured creditors with no annual fee.  Do they exist?  Yes, secured credit cards with no annual fees do in fact exist.  Like all parts of capitalism there are business, banks and lenders that are targeting this segment of society and offer services.  Many of my chapter 7 clients report receiving vehicle loan offers in the mail even before they receive a discharge in their chapter 7 bankruptcy case.  Lenders are targeting them given the lenders know they have not debts post-discharge.   

Best Credit Cards to Rebuild Credit After Filing Bankruptcy

The following is a list compiled from many different websites and the information may no longer be accurate due to interest rate changes and other factors.  Some of the interest rates are very high.  If you pay off the balance each month it does not matter at all though.  You may want to start with the highest interest rate no annual fee cards since they are more likely to give you a card.  If no success, then try the low interest rate low annual fee cards.  If not then try the high interest rate with high annual fee cards. 

Surge MasterCard:                                      Annual Fee $75 – $100            APR- 26% – 30%

Total Visa Unsecured Card –                                       No additional information listed

Petal “1” Visa Credit Card: No annual fee                  APR – 20% – 30%

Platinum Elite Credit MasterCard Secured Card: Annual Fee $29          APR – 19.99%

  • First Progress

Capital One Secured Credit Card:                              No annual fee                                 APR – 26.99%

Discover It Secured                                                       No annual fee                                APR – 22.99%

  • 1% – 2% Cash back on certain purchases

Milestone Gold Mastercard:                                       Annual Fee $35 – $100                   APR – 24.90%

Avant Credit Card:                                                        Annual Fee $39                               APR – 25.99%

Next Gen Platinum Master Credit Card                  Annual Fee $48 – $75                    APR – 35.99 %

  • First Digital

Official Nascar Credit Card                                          Annual Fee: $0 – $100   APR – 17.99% – 23.99%

  • Credit One Bank; 1% cash back on certain purchases

Platinum Prestige Mastercard Secured Card        Annual Fee: $49                                APR – 9.99%

Merrick Bank Secured Visa Card                                 Annual Fee: $36                             APR – 17.45%

Platinum Elite Mastercard Secured Credit Card   Annual Fee: $29                            APR – 19.99%

Credit One Bank Plantinum Visa                                  Annual Fee: $0 – $99    APR – 17.99% – 23.99%

  • For Rebuilding Credit

Reflex Mastercard                                                           Annual Fee: $75-$99    APR- 25.90% – 29.99%

First Access Visa Credit Card                                        Annual Fee: Unknown            APR – Unknown

Fingerhut Advantage Credit Account                      Annual Fee: $0.00                       APR – 29.99%

  • By WebBank

Indigo Platinum Mastercard                                        Annual Fee: $0.00 – $99             APR – 24.99%

The Open Sky Secured Visa Credit Card                 Annual Fee: $35                          APR – 17.39%

Platinum Select Mastercard Secured Card            Annual Fee: $39.00                    APR – 13.99%

How To Rebuild Credit After Bankruptcy

Never ever pay anyone or any company to help you rebuild your credit. Not even a bankruptcy attorney like me.  There is no magic wand that can be waived to fix a credit score.  If you have inaccurate information on your credit report is should be removed so it does not drag down your credit score.  You can do this yourself and for little effort.  Do not call the phone number on that sign you see posted on a telephone pole promising to fix your credit in 30 – 60 days.  It is a scam.  At the same time you are always permitted to pay someone to wash your car even when the car is not dirty. 

  • Pay Your Bills Each Month On Time Each and Every Month

Yeah, easier said than done right?  It is still the single most important step you can take to rebuild credit once things did not go quite right.  Pay your cell phone bill on time.  Pay your rent on time.  Pay your utility bills on time.  If you do obtain a credit card or somehow are allowed to keep a credit card be sure to pay the monthly balance off in total each month.  Do allow a balance to remain that accrues interest.  It all matters at this point and every little bit will help rebuild your credit.

  • If You Have Credit Do Not Use It All

This is referring to the total amount you could borrow or use on your various credit accounts.  For example if you have two creditors both with credit limits of $10,000 you have a total of $20,000 in available credit.  If you use up all of your available credit you will probably need the services of a bankruptcy lawyer sooner than later. The amount of credit you use versus the amount you have is a metric used for your credit score.  The lower the percentage the better for your credit score.,  For example if you have $20,000 in available credit and you are have a balanced owed totaling $18,000 you are using 90% of your available credit.  Not good.  If you are only using $2,000 of the available $20,000 you are only using 10%.  That is what you want.  So a trick you can play to help this percentage is to apply for more credit cards thereby increasing your available credit  while the amount you are using stays the same.  This will lower the percentage of your available credit you are using.  In the example above the person with $18,000 in debt could apply and obtain two more credit cards each with $10,000 credit limits.  The would not have $40,000 in available credit while only using $18,000 lowering the percentage to 45% of credit used.  This is much better than 90% they had previously.  See  number three below though too.   

  • Opening A Bunch of New Accounts All At Once

Inquiries for obtaining credit can damage a credit score.  Each time you open a new account an inquiry is made to the credit bureaus and these temporarily will lower your credit score.  So if you open five new credit accounts within a six month period you will have many inquiries and your credit score will suffer.  This is a game of chess.  It is not just jumping over your opponent like in checkers.  So open accounts over a period of a long time to increase your available credit rather than all at once.  Just because you have $200,000 in available credit does not mean you have to use it.  That is the difficult part when things do not go as planned and credit are used for basic living expenses such as food and utilities.  But this is about rebuilding credit and having a great credit score so increasing your available credit slowly over time is a good thing. 

  • As Mentioned Above Apply For a Secured Credit Card

Secured credit cards are a great way to rebuild credit.  You will have to provide an initial deposit so secure the repayment of the credit card but that is fine.  As you use the secured credit card and there are no issues they will increase your credit limit and eventually the deposit can be refunded to you.  It is important to note this is not a pre-paid card but a secured credit card. 

If I File Bankruptcy Will It Affect My Spouses Credit Score?

By Ryan C. Wood

As with many questions there is a short answer and a long answer.  The simplistic short answer is no.  If you file bankruptcy it will not affect your spouse’s credit score.  When you get married your credit profile is not linked to your spouses.  So, no, if you filed bankruptcy in the past it should not negatively affect your new spouse’s credit score.  Some believe that when you get married the credit profiles are linked and the credit score is averaged between the two spouses.  No, that is not correct.  As a bankruptcy attorney I get asked this sort of question over and over again.

The Long Answer Is Yes Your Spouses Credit Matters

The long answer is yes your spouse’s good or bad credit will affect your ability to obtain credit or loans in the future; generally.  Generally when a married couple applies for a loan for a home a joint application must be filed and this is when both credit profiles are looked at.  This is not an absolute though.  You are not required to apply for a home loan or vehicle loan as a married couple though.  I have no doubt a mortgage lender or broker would be happy to just use the spouse with the highest credit score to qualify for a home mortgage and charge an interest rate 1 – 3% over the market rate at that time.  If you do apply as a married couple most lenders will in fact average or take the lowest middle credit score for spouses applying for a home mortgage or other large credit purchase.

All Community Assets and Community Income Must Be Listed

If you are married you do not have to file bankruptcy jointly with a spouse.  Here in California as a community property state all community assets and all community income must be listed in the petition for bankruptcy protection filed for the filing spouse though.  The community is also getting a discharge of the community debts as well; See Section 524(a)(3) of the Bankruptcy Code.  This is getting very technical and we have other articles about this issue……  Just know that you can file for bankruptcy protection yourself to keep a bankruptcy filing off of your spouse’s credit report.  But also know that the long answer above still applies when seeking credit jointly; both credit reports are looked  reviewed.

The Bottom Line Is Take Steps To Rebuild Your Credit

One of the misconceptions us bankruptcy attorneys hear all the time is how bankruptcy will hurt or lower a credit score.  While having a bankruptcy on a credit report is certainly not positive there are all kinds of entries on a credit report that are not positive.  Also for the vast majority of people I meet with the damage to their credit score already took place given all of the missed payments piling up to that point long before seeking bankruptcy protection.  When I am sitting down speaking with someone their credit score is already pounded down by what took place already.  Most people would be better off credit score wise if they sought bankruptcy protection when they knew payments would be missed or when payments are missed.  At the same time I cannot fault anyone for trying to figure it out in the real world.  The reality is the filing of bankruptcy actually will improve most people’s credit score by stopping any additional negative history being reported and their debt to income ratio instantly changing to their benefit.  There will be no more debt listed on the credit report.  After that it is up to each individual to take the necessary steps to increase their credit score. 

Do Not Pay Any Companies For Credit Improvement Services

I cannot stand driving around and seeing signs stapled to telephone poles advertising how some company can fix your credit for a fee.  I also hear radio commercials about removing items from credit reports for a fee.  The Fair Credit Reporting Act governs the reporting of credit history and negative history can be on our credit reports for seven years.  If information reported to the credit bureaus is not accurate it should be removed and you do not have to pay anyone to do this.   

The Federal Trade Commission Website Is A Great Resource

The Federal Trade Commission provides a sample letter to dispute inaccurate credit entries and a step by step guide on how to dispute inaccurate credit report entries.  It is simple and easy to do.  We are all also entitled to a free credit report each year from annualcreditreport.com or call 1-877-322-8228.  You can get a report from each of the three major credit bureaus or just any single bureau.  The FTC website also has warnings regarding credit scams and other problems you can learn a lot from.  The Consumer Financial Protection Bureau also has this information and additional warnings about credit scams.  The CFPB was created after the mortgage meltdown to specifically help protect consumers from predator lending and other financial problems.

Not Having Accurate Credit History Is Costly

If your credit score is not a high as it should be because of negative history that is not accurate the amount you pay in interest on vehicle loans or home loans will be thousands and thousands of dollars more.  Over the life of a home mortgage of $500,000 at 3.5% interest will result in $308,280 in paid interest.  At an APR of 4.5% the interest totals $412,034; a difference of $103,758.  Realistically here in the Bay Area there are no homes for $500,000 anymore.  So let us have more fun with numbers.  A $900,000 mortgage [this is assuming you put down 20% at the time of purchase and you are purchasing an actual house at around $1.1 million or more] at an APR of 3.5% will have interest totaling $554,905.  At an APR of 4.5% the interest totals $741,660; a difference of $186,755.