Credit Cards After Bankruptcy

Getting Approved For a Credit Card After Bankruptcy

After going through bankruptcy or a consumer proposal, it’s entirely normal to consider applying for a new credit card. After all, a credit card could be a useful tool in rebuilding your credit score and providing a certain level of financial flexibility. However, you must approach this subject with caution. In this guide, we will delve into the ins and outs of obtaining Credit Cards After Bankruptcy: What You Need to Know.

The Need for a Credit Card After Bankruptcy

When you’ve had a fresh start after filing for bankruptcy, the thought of getting a new credit card may cross your mind. This is especially true for the following reasons:


Reestablishing credit history: Post-bankruptcy, your credit score will likely be low. To rebuild it, you’ll need to obtain new credit and maintain a consistent payment history. This is where a credit card comes in handy.

Online transactions: In this digital age, a credit card is often required for online purchases, hotel bookings, and car rentals.

Expense tracking: A credit card could help you track your spending more efficiently than cash.

Rewards and protection: Credit cards often come with perks such as purchase protection, rewards, or points.

However, it’s essential to remember that credit cards pose a risk of accumulating debt again.

The Risks of Credit Cards Post-Bankruptcy

As beneficial as credit cards may seem, they carry certain risks, especially for someone who has recently emerged from bankruptcy. Misuse of credit cards can quickly lead to a cycle of debt. Here are some concerns to keep in mind:


Overspending: Using credit cards for regular purchases like groceries, clothes, or gas can lead to unmanageable debt if not controlled.

High interest rates: As a newly discharged bankrupt, you will most likely have access to only high-interest credit cards. Most of these cards will have a minimum interest rate of 19.99%.

Fees: Over-the-limit fees can be $29 or more, and if you miss a payment, you may have to pay an additional $45.

To mitigate these risks, it’s crucial to use your credit card responsibly.

Improving Credit Score with a Credit Card

You might be wondering, “Which credit card will help me improve my credit score post-bankruptcy?” Here’s where we delve into the aspects of credit rebuilding with new accounts.

The most potent instrument for establishing new credit is a credit card. This is because credit cards affect three out of the five factors that can impact your credit score positively or negatively:


  • Payment history;
  • Credit utilization rate;
  • Length of credit history.


A credit card provides an opportunity to demonstrate your ability to manage credit responsibly. But can you get a credit card during your bankruptcy or proposal? The answer is yes, through a secured credit card.

Secured vs. Unsecured Credit Cards

When deciding to get a credit card after bankruptcy, it’s crucial to understand the difference between secured and unsecured credit cards.

A secured credit card requires a security deposit, with the credit limit depending on your initial cash deposit. It’s more accessible, especially if you’re an active bankrupt, and can help repair your credit score.

Unsecured credit cards, on the other hand, rely on the credit card provider’s assessment of your creditworthiness. Once you can prove your responsibility in paying off borrowed amounts, they may be willing to increase your credit limit.

There are several credit card issuers, like Capital One or Canadian Tire, that are more inclined to issue an unsecured credit card to someone with bad credit.

Steps to Rebuild Credit

The primary purpose of obtaining a credit card is to have a revolving credit account that gets paid off frequently. Here is the recommended process to fully rebuild your credit:


  • Clean up any errors on your credit report.
  • Apply for one credit card with a small limit.
  • Wait a few months to apply for a second card.
  • Wait a few more months to increase your limit for the first card.
  • Wait a few more months again to increase your limit for the second card.
  • Always pay on time and keep your balances low.


Credit Card Strategies that Enhance Your Credit Report

Once you have your new credit card, the two most critical aspects of rebuilding your credit are timely payments and low balances. Avoid late payments at all costs as they can derail your credit repair efforts.

Good Credit Card Habits for Your Finances

While you might be tempted to use credit cards in your everyday life, it’s essential to establish good credit card habits to avoid falling into a debt trap again. Here are some tips:


  • Until you can manage your budget, limit your credit card charges to a small recurring bill.
  • Avoid large purchases.
  • Don’t take out cash advances.
  • Don’t rely on your credit card for emergencies.
  • Use your credit card as a payment tool, not a borrowing tool.



Obtaining a credit card after bankruptcy and using it responsibly can help rebuild your credit score. However, it’s crucial to use it wisely to prevent falling back into a cycle of debt. Understanding the nuances of credit cards after bankruptcy is the first step towards financial recovery and stability.

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