Retired, with recent bankruptcy: Should you get a card?

Proceed with caution and consider a secured card


Dear Credit Smart,
I am recently retired as of January 2015, and my Chapter 7 bankruptcy was discharged about one month ago. I live on my income from Social Security (about $2,000 a month) and a pension (about $1,400 monthly).  My only expenses now are rent ($975), utilities, life and car insurance, cellphone and cable. My credit score is 705. When would it be a good idea to apply for a credit card? I don’t mind living on cash in hand, but a credit card would be a nice safety net and a way to increase my score. Please advise. Thanks. – Antoinette


Dear Antoinette,
A common problem people have after retiring is deciding if they should open new credit accounts. While having a credit card can be a great convenience, for those on fixed incomes, that convenience sometimes can be costly.

You have the added concern of your recent bankruptcy, which can make obtaining new credit a little trickier. Though discharged, your bankruptcy will remain on your credit report for up to 10 years from the filing date. I am not saying that your bankruptcy will disqualify you from getting a credit card, but you might not be able to get a card with the best interest rates now.  

Your credit score, though, is above the 700 mark, which is generally considered good. With your good credit score, your bankruptcy may not be an issue with many creditors.

There are many moving parts when it comes to your credit score, and issuers don’t use credit scores alone to determine whether to send a credit card to you. Your overall financial well-being also is assessed, including your ability to repay.

If you do find lenders are rejecting you for a credit card, consider a secured card, which requires a security deposit. Secured cards can help you build credit post-bankruptcy. Use the card regularly, pay on time and never carry a balance. In a year or so, you can try again for an unsecured credit card – or graduate from your issuer’s secured card to one that’s unsecured.

You are correct in your thinking that having a credit card could increase your score since it will add available credit to your profile.  However, a hard credit inquiry triggered by your credit card application will show up on your report and that will temporarily lower your score by a handful of points. 

So proceed cautiously. Apply for only one card, and wait for a response before applying for another. A tool such as’s CardMatch can help you narrow the field to cards for which you are likely to be approved.

Assuming you move forward with obtaining a card, there are steps you can take to protect and increase your credit score. The No. 1 factor in your credit score is your history of on-time payments.  Your credit utilization (available credit) also will be very important. You say you want the card as a safety net, but to get the most out of your card for your score you will need to use the card on a fairly regular basis.

What you can do is use your card for your regular monthly expenses, such as groceries and gas. The goal is to keep from charging more than about 35 percent of your available credit, and to pay off the balance every month.  This demonstrates a responsible use of credit, keeps your card active and builds up the on-time payments portion (35 percent) of your score.

The best thing about this plan is that you will never find yourself mired with credit card debt, because you will never charge more than you can afford to pay back.

Of course, your reason for wanting a card for a safety net means that you may have to use the card for an unexpected expense that you are not able to pay for all at once. In that case, you will need a plan for paying off that expense in the shortest time possible.  If you can pay off the balance in 90 days, you will pay a minimal amount in interest.

Remember to always use your credit smarts!

See related: 5 reasons you need good credit in retirement, 9 things to know about secured cards

Meet's reader Q&A experts

Does a personal finance problem have you worried? Monday through Saturday,'s Q&A experts answer questions from readers. Ask a question, or click on any expert to see their previous answers.

Join the discussion
We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.

The editorial content on is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company's business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.

Weekly newsletter
Get the latest news, advice, articles and tips delivered to your inbox. It's FREE.

Updated: 12-14-2018