Area of Law: Credit, Debt and Bankruptcy
Answer # 0262
How soon after bankruptcy can I get a credit card?Region: Ontario Answer # 0262
Being discharged from bankruptcy generally marks the end of your bankruptcy procedure. However, your bankruptcy stays on your credit record for six or seven years from the date of your discharge (depending on the credit reporting agency’s retention policy). This will affect your ability to get loans and other kinds of credit in the future.
However, once you are discharged you can apply for a credit card immediately. Whether you will be given a credit card, and the type of card is dependent on the financial institutions policies. Generally, it will take one to two years before you can get an unsecured credit card. In the meantime, there are other options.
Before you apply for a credit card
1. Get a new credit report
First, before you apply for a new credit card you should confirm you have an accurate credit report. You can obtain a copy from a credit bureau, such as Equifax or TransUnion.
A credit report contains information such as:
- details about your credit cards and loans, including: when you opened your accounts, how much you owe, and when you make or miss payments
- personal information including if you have ever filed for bankruptcy.
2. Correct any errors on your credit report
Your new credit report should show that you have no debts (unless you still have debts that are not cleared by bankruptcy, such as child support payments) and that you have obtained your final discharge from bankruptcy. If the credit report is not correct, identify the errors and notify the credit bureaus immediately. In most cases, you can fill out a form provided by the bureau. You may have to provide documentation as evidence that you have received your final discharge from bankruptcy.
Usually within 30 days of filing your notice of errors to the credit bureau, they will send you a written response outlining what action they have taken to correct the errors or confirm that the information they have is correct.
Applying for a new credit card
Secured credit cards
After you determine that your credit report is accurate you can apply for a secured credit card. When you apply for a secured credit card, you will be required to provide a security deposit, usually a minimum of $500 (depending on the company) in case you default on the account. This deposit is usually equal to, or larger than the credit card limit (the amount you are approved for). Once approved, you will receive your credit card in the mail and you can begin using it as you would a normal credit card. After several months of using the card you may be able to apply to get your security deposit back, otherwise, the deposit will be refunded in full with interest when you close the account.
Prepaid credit card
If you cannot obtain a secured credit card, you can apply for a prepaid credit card. With this type of card, credit is not actually being extended to you. Basically, you deposit a certain amount to be available through the card.
Online debit cards
Banks also have cards that can be used online, like a credit card, but operate similarly to debit cards in that the money is taken out of your bank account at the time it is used.
Unsecured credit card
If you pay off your balance each month your lender may eventually offer you an unsecured credit card (no security deposit, or prepayment is required and it may have a higher balance available at a lower interest rate).
Once you receive your new card
After you receive your new card, pay it off in full each month, if possible, or at the very least, make the minimum payment. This gets reported to the credit bureau and will help establish a positive credit report that will begin to increase your overall credit score. If you are late with a payment or miss a payment altogether, however, that will also be reported to the credit bureau and will negatively affect your credit score.
A criminal record will affect your ability to get a loan, a mortgage, or a job. To erase your criminal record, call toll-free 1-877-219-1644 or learn more at Federal Pardon Waiver Services. It’s easier than you think.
When you are in a situation of financial difficulty, there are many options to consider before filing for bankruptcy. For easy-to-understand debt solutions on your terms, contact our preferred experts 4Pillars and rebuild your financial future. With 60 locations across Canada, they will help you design a debt repayment plan and guide you with compassionate advice. No judgment. For help, visit 4Pillars or call toll-free 1-844-888-0442 .
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