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Monday, September 7, 2015

My First Credit Card After Bankruptcy

Some people will say that it is best not to apply for any credit at all for a while after claiming bankruptcy. I wanted to start building my credit right away after being discharged. Even before being discharged from bankruptcy I applied to a credit card.

I knew that I wouldn’t be approved for a credit card with actual credit right away. I opted to go with the credit card that helped my build my credit last time. I applied for a Capital One Guaranteed credit card.

Guaranteed cards are cards that you put a security deposit towards the card and they approve you for an amount of credit. Then after a certain amount of time of on time payments they return the deposit and it becomes all credit. My first card with them I was approved for $750 with a $75 deposit. The deposit was returned after just 6 months. They then gave me the option to raise my credit limit every 6 months or so (750- 1750-3750-5000 was the order it increased the first time)

I was approved for $300 with a deposit of $300. Which means this card is 100 percent funded by my deposit. I was also approved for an interest rate of 19.80%. Yup that’s right, they are going to charge me 19.80 percent on my own money. However, keep in mind I did say that this was the same company that I had prior to the bankruptcy. My card with them was written off in the bankruptcy. I am surprised I was even approved at all.

I have now had this card for 11 months. I have had the card paid off or close to each month. I haven’t had any offers yet to raise the limit. I am sure that I will need to wait till either 1 or 2 full years with this one.  Half of the point of having a credit card though is so you can make larger purchases like renting a car or booking a flight or online shopping. I have since raised my own credit limit by $300 (double where I started) for 2 reasons.

Because I needed to rent a Uhaul and I needed to have enough space on the card to rent the truck
You need to use you card a little bit here and there to get it to help raise your credit limit. You also should keep the limit over at least 80% at all times.  Which would have meant less than 60. My cell phone bill is more than 60 bucks. Now that the card limit is higher I am able to use the card for a purchase here and there and not worry about the charge being too much.

I am going to follow up this post with a post about my actual credit ratings and the struggles I have had correcting that. But so far in the 11 months since I have had the card I have raised my Equifax score from 434 (horrible) right after the bankruptcy to 560 (still pretty bad but not horrible).  From 434 -500 was solely because of the card. I had a lot of discrepancies on my report and once I had them removed the report went up the rest of the way.

My Transunion report only has one small issue on it, which I am still dealing with right now.  But my rating with the is at 590. 590 is not really a bad score. It is a bad score but it is just on the edge of making it into the range of a decent score.

The best part of this card is that I only had to come up with 300 up front. Then I was able to add more to it when I had it/ needed it through the same method that I added the first amount. They give you instructions and a special account number to deposit the money into if you want it on your credit limit. Its really fast. If I wanted to raise my limit to 1000 by next Saturday I would just need to deposit 400 today. BUT then when they finally decide that I am going to be responsible with the card and that they are going to take a chance on me. They will return the security deposit. That is an extra 600+ that will come to me in a lump sum. (I have also heard from other customers that they will sometimes double the limit at the same time but not always)

I would really suggest this card to anyone that is looking to build their credit- bankrupt or not. However, you need to be ready to be responsible with the card and the payments. The interest is very high, and it isn’t going to help you at all if you aren’t paying it on time.