If you are or have been declared bankrupt it can be hard to obtain credit of any kind in future. This is especially true of credit cards as they have a revolving credit system. This does not mean that it is impossible, in fact many can and will use credit cards to rebuild their credit rating. It is highly unlikely that one would be eligible for an instant approval credit card when bankrupt however as instant approval almost always relies on the applicant having an excellent credit rating.
Credit card companies use of credit ratings in order to decide who they wish to give their credit cards to. This will mean that a person with a good credit history will have a wide range of cards to choose from, while a person with a bad credit history will have a narrow choice, if any choice at all.
However there are lenders who are willing to allow a person to borrow money on a credit card. These are specialist lenders, and the credit cards that they issue tend to have higher interest rates, shorter interest free grace periods and generally worse terms and conditions. Many of these specialist lenders are divisions of larger banking groups. The credit cards also tend to be differentiated so they will tend to ask very exact questions as to the exact credit status of the applicant.
Prepaid credit cards are may be a better option for discharged bankrupts. These are credit cards that have to be “filled up” before they are used just like a prepaid mobile phone. This means that there is no actual borrowing on a credit card but the credit card holder will be able to use the credit card to pay for goods over the internet and over the phone. As there is no borrowing on the card then there is also no reporting to credit bureaus and prepaid credit cards cannot be used to raise a person’s credit rating. Secured credit cards are another option that bankrupts should look at however these are slightly different. The amount loaned on the credit card via it’s limit is secured, meaning that the card is backed by a sum of money held in a bank account. This will mean that the credit card can report to credit bureaus and will help a discharged bankrupt to rebuild their credit rating.
