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Bankruptcy can negatively impact every aspect of your life, but it has a particularly terrible effect on your credit score.A declaration of bankruptcy can sink your credit rating by as much as 220 points for seven years or more.
That’s enough to take a “good” score down to “poor,” which means that you won’t be able to enjoy your low interest rates, cash back rewards and high spending limits for a long, long time.
However, filing for a Chapter 13 or Chapter 7 bankruptcy doesn’t mean that you should stop using credit altogether. The best way to get lenders to trust you again is to show them that you’re actively rebuilding your credit score through regular spending and repayment. So where do you find a credit card that you actually qualify for?
Well, in light of the 2008 credit crunch, many credit card issuers have started offering cards designed specifically for consumers who’ve experienced a bankruptcy. These cards feature limits that increase over time as well as additional monitoring services that are designed to help you get your credit score back on track.
Here’s a look at some of the best ones currently on the market.
The Orchard Bank Classic MasterCard. Don’t let the palm tree, butterfly or dolphins on the card face fool you – the Orchard Bank Classic MasterCard is a very aggressive spending tool. To help you spend more often and more intelligently, the card allows you to choose your own repayment date, and you’ll receive email and text message reminders as that date approaches. It also features other benefits, like a 24/7 help line, emergency card replacement and zero-liability fraud protection to keep you secure while you rebuild your score.
The AccountNow Prepaid Visa Card. The AccountNow Prepaid Visa is one of those rare prepaid debit cards that actually reports your spending history to a credit monitoring bureau. You can load it up with as much as $5,000 a day (for no charge), and you can even write online checks with it for free. Since the card doesn’t carry a balance, it’s good choice for consumers who are worried about falling back into debt.
The CreditOne Platinum Visa. Watch out! Someone just got their Platinum Card back! Well, sort of. If you’re concerned about those snobs at the country club finding out that you lost it all, you can keep up the appearance of “platinum status” while rebuilding your credit score with the CreditOne Platinum Visa.
For $75 a year, the card will report all of your monthly purchases to the major credit monitoring bureaus, but that’s not all. You’ll also get travel accident insurance, and your spending limit will increase automatically over time. Break out the Grey Poupon, because somebody’s living the high life again.
No matter how you slice it, bankruptcy credit cards aren’t ideal pieces of plastic. They have low limits.
They make you cough up a security deposit to use them. They come with annual fees. But in a market full of rip-off products for “bad credit” consumers, at least these credit cards are honest. They’ll report all your purchases to the major credit monitoring agencies and your spending limit will increase as you continue to prove your trustworthiness. And after a year or so, you might even be eligible for an upgrade.