Can I get a credit card if I'm bankrupt or still repaying past credit?

For those with severe debt problems in their pasts, trying to get a credit card can be difficult.

For those currently declared bankrupt or currently repaying bad debt it can be downright impossible.

Credit cards for poor credit

While there are credit cards available designed especially to build credit or improve past problems, they're still credit products and lenders (where accepted) still stipulate that bankruptcy must be discharged and often specify a minimum waiting period - but the more recent the problem the harder it may be to borrow again.

Here are two examples of current 'credit builder' credit cards and a brief detail of the credit profiles they will consider (you can click through on the product names to see the full application criteria without leaving this site):

Capital One Classic credit card
	Suitable for: Poor credit history or new to credit (have not been declared bankrupt in the last 12 months)	Apply here »
Representative Example: 34.94% p.a. variable on purchases. This is equivalent to 34.9% APR representative variable based on a credit limit of £1,200. Capital One (Europe) plc, Registered Office: Trent House, Station Street, Nottingham, NG2 3HX.

Vanquis Visa credit card
	Suitable for: Bad credit problems or no credit history. Not currently declared bankrupt.	Apply here »
Representative Example: 39.94% p.a. variable on purchases. This is equivalent to 39.9% APR representative variable based on a credit limit of £1,000. Vanquis Bank Limited, No. 1 Godwin Street, Bradford, West Yorkshire, BD1 2SU.

Bankruptcy:

Neither of these credit cards are available to non-discharged bankrupts.

Capital One ask that applicants haven't been declared bankrupt in the last 12 months.

Vanquis Bank state that people can apply as long as they are not legally restricted from obtaining credit, so applicants will be considered as long as the bankruptcy is discharged.

Other poor score credit cards, such as the Barclaycard Initial [click through for cost of credit] are stricter in their application criteria though. Barclaycard asks that applicants do not have any history of bankruptcy at all or any CCJ's or IVAs in the past 5 years, for example.

In short though, it's difficult to meet approval criteria for those who have been declared bankrupt only a little while ago and, as we look at in another guide, there's no such thing as a guaranteed credit card.

Another option for recently discharged bankrupts are prepaid cards. Unlike credit cards, prepaid cards aren't subject to credit checks, although some (especially those offering credit builder services) will require proof of ID.

In debt now:

If you are still repaying past credit then your eligibility for a credit card will depend on a number of factors.

The level of debt that you are in, along with the amount that you pay out on your existing debts, will be taken into account in order to assess your eligibility.

Even some credit cards that are designed to help cardholders repay credit card debts specify that applicants can't be in too much debt.

For example some of the platinum Barclaycard credit cards specify that applicants' debts (excluding a mortgage) must make up less than 10% of their income.

That's an extreme example but fairly typical in the sense that lenders tend to be looking at store card and credit card (unsecured) debt rather than mortgages.

As a rule of thumb, it's best to pay off as much debt as possible before applying for anything new.

Past debts:

If you have a tarnished credit history as a result of past debts this will also be taken into account.

Missed payments on credit cards or personal loans stay in a credit report for three years and can be seen by lenders.

More serious actions taken to resolve problem debt such as County Court Judgements for non-payment (CCJs), Individual Voluntary Arrangements (IVAs) or insolvency can be seen for longer and often exclude applicants from the top deals altogether.

However, note that completely repaid debts with no missed payments can actually positively affect the way you are viewed by a potential lender - this is the very logic behind how credit cards can help to rebuild a credit report.

Showing that you're able to manage borrowing and pay back a debt is viewed in a positive light.

Using products such as the cashplus prepaid to improve a credit rating can be a good way to improve ability to gain access to credit in the future.

Debt advice

This article can only offer general information and it can't take into account the variable nature of personal situations.

If you need specific debt advice, a free debt advice agency, such as Citizen's Advice , CCCS or National Debtline would be able to provide you with a personal response and more in-depth information.

Comments