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A bank may not give you a credit card post bankruptcy on 3 grounds

December 11th 2012

Have you just cleared all your debts through bankruptcy? If yes, then you must be happy and relieved now. You have finally paid back your creditors. You won't have to save every penny to pay off your debts anymore. However, all your happiness goes away when you check your credit score. You credit score has dropped by more than 200 points. Your credit score has been tarnished.

Your debts have been paid off. Now, you have to find out the ways to repair your credit. One of the sure shot ways to repair your damaged credit is to apply for a secured credit card. It is easier to be eligible for a secured card. This is because the bank can take away the money you've deposited if you default on the card. However, it is not that all the people are able to get a secured card from the banks. Some fail to obtain secured credit cards. Here are the possible reasons why bank may reject your credit card application straightway.

1. You have approached the wrong lender: Every bank has different lending criteria. Some banks don't like to give secured credit cards to borrowers who have filed bankruptcy recently. They prefer to give credit cards to the borrowers with awesome credit history. They are skeptical to accept the credit card applications of the borrowers who have to seek help from the court to get rid of debts.

Don't submit credit card applications to such banks. Rather, check out the lending guidelines of the banks in advance. Find out if the bank offers credit cards to people who have filed bankruptcy in the past.

2. Your monthly income us not enough: The lender would want to know that you've the capability to make the payments on the card every month. Lender will not be satisfied by knowing that you've paid off your debts. He would want to see your income. If he thinks that your monthly income is not enough, then you're less likely to get a credit card.

You can rectify the situation by increasing your income. You can do a part-time job. In fact, you can try to get a better job. Once you start making a good amount of money every month, it'll be easier for you to qualify for a secured credit card.

3. You have financial obligations: Usually, Chapter 7 bankruptcy allows you to get rid of unsecured debts within a period of 3-4 months. You can start a fresh financial life after getting bankruptcy discharge. However, it may be the case that you have some other financial obligations. For instance: you have to pay off your mortgage. You still have student loan debts on your shoulder. In such circumstances, bank may not think that it is feasible to give you a secured credit card.

The possible solution to this problem is to fulfill your financial obligations. You've to pay off your mortgage and student loan debts at some point in life. So, it is better to get rid of them as early as possible. Attack your secured debts aggressively. Set aside a certain amount from your monthly paycheck. Use this amount to make additional payments on your debts.

As your debt load starts declining, you'll see a gradual rise in your credit score. You can apply for a secured credit card again.

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