Credit Card Application While on Chapter 13 Repayment

[nola2021]

I filed for chapter 13 about 4 years ago and my credit is now improving. I recently checked my credit file on experian and from their recommendations it shows I qualify for a very good CC without a membership fee and my approval odds are very high according to them. However one of the banks listed is the same one I had a CC with that was included in my bankruptcy. Would it be not a very good idea to apply with them? I know the cards listed on my credit profile are probably random picked by the system.

[justbroke]

There are a few creditors which will blacklist you and will not allow any new applications. Some of these creditors have lifelong bans, but even those seem to soften after 10-15 or even 20 years. American Express doesn't like losses. Neither does Barclay nor Chase. Some others, like Capital One, don't seem to care one bit and will issue a new account.

While one of the credit agencies may say that you qualify for a credit card, many of the major banks will immediately decline an otherwise good application. The reason isn't the FICO score. The reason is that your report -- or SageStream or LexisNexis -- will show an open bankruptcy.

You may also want to check that you're allowed to incur debt while in your Chapter 13, without permission.

Welcome to BKForum.

[shipo]

I agree with justbroke, regardless of whether it is CreditKarma, WalletHub, Experian, or any other "credit" specific web site, if they say you qualify for any given card, take it with a serious grain of salt, they have some generic insight on the metrics various lenders use for underwriting, but nowhere near the full picture. Here's an example, last year I looked at all three of the sites I just mentioned, plus a few more, and virtually all of them stated I had "excellent odds" of being approved for both a Discover card and an AMEX card. Without even trying I knew I was blacklisted with AMEX, so that was an instant bust; however, I took the bait on Discover and was denied. Reading various posts on Discover denials, the recommendations were to continually use their prequal page, say every other week or so, until you are approved. Yeah, about that, I tried it every two to three weeks between September and December, and was denied every time. To this day, all of the credit sites show me as having excellent odds of being approved for Discover.

Long story short, since even specific vendor prequal pages have a degree of uncertainty, you can bet the accuracy rate of the credit sites is even lower.

I also echo the comments above regarding incurring debt while in your Chapter 13, here in New Hampshire that couldn't happen without Trustee approval, and that wasn't terribly likely.

[flashoflight]

The presence of a non-discharged bankruptcy itself is an automatic disqualifyer that is not accounted for in the credit approval odds, which is worse than merely having the bankruptcy in the report. Chapter 7s have a better chance of getting credit until the 13 is discharged.