When/How to start rebuilding credit?

Hi! My husband and I have filed for BK. Our discharge will go through in March, the 21st. When should we start looking at rebuilding our credit? Should I wait until after the discharge to apply for a secured CC? Thanks so much for any advice!!

Hi,

I always tell people that filed BK to wait a minimum of one year to applying for new lines of secured/unsecured credit. Society has made low and middle income people so dependent on credit that.........re-establishing credit is the first thing a family/person wants to do after they had all thier debts (credit card) discharged under BK! If a person wishes to live a propersous finanicial life after BK, they need to take the time to change how they view debt, money, and credit; this is critical!!!! Hence, living life on a cash only basis for a year more can truly play an integral role in augmenting ones' concept of debt, money, and credit.

During this one year + timeframe, you should be saving/investing as much money as possible! Again, the majority of individuals that files for BK don't have any liquid monies at there disposal. I gaurantee that, the feeling of having $3,000, $5,000 or $10,000 of liquid monies in the bank will be a more satisifying feeling, than it is to be "re-establishing" your credit!

But to answer your question, you can apply for new credit the moment your BK is discharged. But keep in mind that, time will work in your favor too. You'll be recieving secured credit card offers left and right without even having to apply for it. Within a year or two of your BK getting discharge.

Just some food for thought!

Good Luck!

Todd,
Thank you for your answer. We were in credit counseling for three years prior to this, so living without a CC has become old hat, but we were told that you need to start est. credit as soon as possible after discharge. We do have a small savings now, almost $3000, thanks to the BK and reaffirming some of our higher interest rates. I also graduated in Dec, so that has helped too. After a year of not working, I have a garanteed job and contract for next school year. The BK has taken so many worries off of our shoulders, it will feel great when that discharge comes through next week. This site is a wonderful thing, and I am glad I found it. Thanks for your help!!!

Todd,
Your statement here will be "passed over" lightly by most people. I am referring to the "liquid" issue.

Wisdom is often passed over lightly as we pursue what we deem more important.

You have made the wisest and simplest statement ever made in this forum. it is the purest common sense, but most of us overlooked it. It is now emblazoned in my mind. Thank you a thousand times over...

When you deal with car repairs, emergencies, etc... Good saving habits are indespensable.

Now that I don't have a credit card to my name for the first time in my adult life I feel more in control of my money. Honesty, I made alot of money while I had my great job but I never knew were it went. It was a shuffle from one credit card to the other, of course always having what I wanted...
A simple observation, since I have been buying my gorceries with paper money, I actually buy less and really think about what I'm buying. My husband opened up a new bank account before the BK and he has a visa check card but I don't want one! After I return to work in a year or two (I'm taking time off with my little one) I will than start thinking about credit cards. I have my student loans to help me rebuild my credit for now.

EdytaHome, A......absolutely....men!!!!!!! Casah in the Bank is a grand feeling!!!!!!!!!!!!!!!!!

I am in the camp that says you should start as soon as possible rebuilding your credit, but that does not mean you should jump on the first pre-approved card offer you get, and the cards you do get should see limited use. It has been less than 2 years since our (my wife and I) discharge, and we already have 3 platinum cards (unsecured) between us and recently bought a new car at just under 6% interest. We also refinanced our home at 7% (just a smidgen over our original mortgage) to take out some cash (about 15,000) for some needs and to put some cash in a savings account. The trick is to be picky at first, and be smart later. We were offered tons of cards from the big sub-prime guys (Capitol One, Orchard, Providian, etc) We didn't take a secured card...passed on the classic cards...just ignored the mail until we were offered a Capitol One Platinum (platinum in name only, no real benefits and only a 2 grand limit) with no annual fee. You will notice the same banks will keep sending you offers, each better than the last (assuming you have behaved and paid stuff on time). Just wait til you get the one you like. Then apply to only that 1 card. You want to keep credit inquiries to a minimum. Once you get the card (and you will get it at some level) use it. But not like you used the other cards that got you in trouble. I put my Netflix and DirecTV on my card as autopayments. I know I will pay them anyway, so I put them on the card and pay the card off in full every month. No purchases...don't even take the card out with you, leave it locked up at home. If need be, cut it up, but just keep paying some bills with it that you would pay anyway and pay the bill in full every month. You will be surprised how fast better credit offers will come in. Ignore those too for a while til the good ones come in and get maybe one more card. Do the same with it. Live cash, but build credit. Perfect harmony.

great advice

Hi,

I always tell people that filed BK to wait a minimum of one year to applying for new lines of secured/unsecured credit. Society has made low and middle income people so dependent on credit that.........re-establishing credit is the first thing a family/person wants to do after they had all thier debts (credit card) discharged under BK! If a person wishes to live a propersous finanicial life after BK, they need to take the time to change how they view debt, money, and credit; this is critical!!!! Hence, living life on a cash only basis for a year more can truly play an integral role in augmenting ones' concept of debt, money, and credit.

During this one year + timeframe, you should be saving/investing as much money as possible! Again, the majority of individuals that files for BK don't have any liquid monies at there disposal. I gaurantee that, the feeling of having $3,000, $5,000 or $10,000 of liquid monies in the bank will be a more satisifying feeling, than it is to be "re-establishing" your credit!

But to answer your question, you can apply for new credit the moment your BK is discharged. But keep in mind that, time will work in your favor too. You'll be recieving secured credit card offers left and right without even having to apply for it. Within a year or two of your BK getting discharge.

Just some food for thought!

Good Luck!

SOunds like u got it down man good luck


QUOTE=vic6string]I am in the camp that says you should start as soon as possible rebuilding your credit, but that does not mean you should jump on the first pre-approved card offer you get, and the cards you do get should see limited use. It has been less than 2 years since our (my wife and I) discharge, and we already have 3 platinum cards (unsecured) between us and recently bought a new car at just under 6% interest. We also refinanced our home at 7% (just a smidgen over our original mortgage) to take out some cash (about 15,000) for some needs and to put some cash in a savings account. The trick is to be picky at first, and be smart later. We were offered tons of cards from the big sub-prime guys (Capitol One, Orchard, Providian, etc) We didn't take a secured card...passed on the classic cards...just ignored the mail until we were offered a Capitol One Platinum (platinum in name only, no real benefits and only a 2 grand limit) with no annual fee. You will notice the same banks will keep sending you offers, each better than the last (assuming you have behaved and paid stuff on time). Just wait til you get the one you like. Then apply to only that 1 card. You want to keep credit inquiries to a minimum. Once you get the card (and you will get it at some level) use it. But not like you used the other cards that got you in trouble. I put my Netflix and DirecTV on my card as autopayments. I know I will pay them anyway, so I put them on the card and pay the card off in full every month. No purchases...don't even take the card out with you, leave it locked up at home. If need be, cut it up, but just keep paying some bills with it that you would pay anyway and pay the bill in full every month. You will be surprised how fast better credit offers will come in. Ignore those too for a while til the good ones come in and get maybe one more card. Do the same with it. Live cash, but build credit. Perfect harmony.[/QUOTE]

The credit card offers will follow in time. Remember to practice the following:


Always pay your bills on time
Don't apply for too many lines of credit
Don't max out your credit cards
Hold on to credit cards with which you have a strong credit history


Here is an article (http://www.poorcreditgenie.com/poorcredit/creditscore/school.html) on how your FICO score is determined.

Anyone try getting credit with Fingerhut? Looks like they have a HUGE selection of items to get and offer payments. Also, PLEASE tell me if i should wait till after my discharge before i apply for anything - discharge in two weeks. Thanks.

i guess i wouldnt use anything from fingerhut. you will get plenty of offers elsewhere.

the longer you wait till after your discharge the better. but i havnt seen anything that say you cant apply before it.

you can get orchard card really easy it seems to help build your credit. $39-59 annual fee. 15% APR and no monthly fee.

Jeff, I was just approved for the Orchard $39/year 14.9% unsecured with a $300 limit. I am not discharged yet. I did wait to apply till after my 341. So I suppose as long as the US Trustee doesn't come along and want to convert meto a 13 I'm OK.

Orchard will do a soft pull first to tell you which cards you are most likely to be approved for. Then you can apply for whatever card they recommend--and that will be a hard pull.

I agree that people need to change they way they view credit(Not all of us filed BK due to credit card debt)--but the fact is, that credit is very much a requirement in this society. Not having a good credit rating can affect the ability to get bank accounts, utilities, and even determine what rate you may get on your insurance. I think rebuilding POSITIVE credit is one of the most important things we can do after BK. Build credit but don't go back into debt. Charge something small you have to pay every month(even just 1 tank of gas) and pay it off in full every month.

I wanted to go ahead and start getting a positive account on my CRA's. I will probably wait a while before getting any other ones. I was happy with this as I thought I would have to go secured at first. I wonder why some people seem to get some really good offers soon after BK and others 6 months down the road are still barely getting a secured card.....Anyone have any thoughts on this?

I can't agree more about the savings-Before I filed for BK even a $400 car repair seemed like a catastrophe and was a great source of stress. I started havinga portion of my pay go directly to a savings account--and NO ATM access. That is my way of making it a little less tempting to use that money for other things.

I just wanted to know if i'm doing the right thing with my credit. my chapter 7 discharged 2-22-06 and i just finish my medical billing and coding course. So you know I have student loans. They are with sallie mae and are deferred until october of this year. Now I know student loans are basically an installment loan that will be reprted every month on my credit report and I can establish my credit that way too. but i just wanted to know should i apply for one of the credit cards(Orchard bank-Aspire Visa)? or do i just establish my credit with my student loans. Plus i plan on going back to school for nursing soon. Can someone let me know what to do?

email address also: nessawright27@yahoo.com

If you want to build credit, then student loans alone may not be enough. From everything I have read, installment loans are not nearly as important as revolving accounts. If you want to build, then opening a credit card or 2 would help.

I'd say to avoid Aspire & their fees, and try Orchard or a secured card.

I agree with roadrunner. Leave aspire alone and go with Orchard.

Do anyone know anything about First Premier Credit Card? Is it OK like Orchard Bank?

Do anyone know anything about First Premier Credit Card? Is it OK like Orchard Bank?


Lots of fees.

THe only problem that I had with them, is when I closed the account, they tried to charge me a monthly maintenance fee, even though the account was completely paid off...

they reversed the charge immediately and took care of it.

I am glad to see some people are learning that it is important after bankruptcy to learn to live on cash and experience the life and freedom of no credit cards. Paying with cash is awesome and you really think about what your buying and if you really need it or not. Way to go for the people learning to live on cash and not credit. Remember the borrower is always slave to the lender.

I was approved for a First Premier Card in july and I check my credit report with transunion&experian and it's reporting. The fees they charged sucks but you have to start somewhere. I dont start paying my student loans til October. I applied for a Hooters card also so we'll see if i can get that card too!! There is hope after bk!!!:clapping:

Hmmm, I kept my car from being included in the payment plan (that has yet to be confirmed), simply because I think it looks good to some extent that I'm paying on it. Whereas if it were mixed into the payment plan, it doesn't show monthly payments on your credit report, does that count for anything in the end?

Catchmeifyoucan

Also get business credit started. It is very easy & does not take long to get established.
It took me only a few months to get a business credit card.

The Cadillac Man Did Me In

--------------------------------------------------------------------------------

I am so mad with myself, but being unfamiliar with the process and having filed a Chapter 7 two years ago, well....I guess I will have to live with what has happen to me. For the last two years, I have been able to pay my car note on time with no problems to GM. I was leasing a car and had A-1 credit in 05 when I got it, however my children being diagnosed with autism caused our family major financial problems and I had to file.

Since that time, I have been saving, watching my pennies, not being late on any bill and since I had nothing to pay except rent, car note, car insurance, light, gas and phone, I paid these on time and really thought I was doing good at rebuilding my credit and my credit score. Last year when I heard that the car companies were going under, I was under the impression that researching and checking to see if this problem would be of a benefit to me as an American person, imagine my surprise when my lease was up and I had to return my vehicle to Cadillac and was told that nobody was leasing a lot anymore because the car companies had lost loads of money on leases. Of course I believed this because this was GM and the Cadillac dealer. Why would they try and use me since I had never missed my car note.

But of course them about to go under(GM) and helping people do not go hand in hand. I should have known better. Well, let me tell you guys what happen to me and maybe I am in the toilet and maybe I can do something to help myself as this issue is only 2 weeks old. I returned my Cadillac leased vehicle to Cadillac in Chicago two weeks ago. While in the dealership, I came across the nicest or what appeared to be salesman and he insisted that they were working on trying to keep me from being without a car since leasing was not in the cards as they said. I did the paperwork to return the lease and waited until they "crunched some numbers" as the salesman said.

After being in the dealership all day(8)hrs and many phone calls and cups of coffee later, I was sold a 2006 Cadillac with 8772 miles on it. The car cost 25,000 dollars. At first since my car turned in was a 2005 with 38,000 miles on it, I thought I was getting a pretty fair deal. But the interest on the car was unbelievable. Not only that, but the salesman told me that GM would not finance me again for another lease, but if I was able to buy a used car, how come they could not finance me for that?

Also, my old interest rate was 10 percent and of course I did not expect that again, but I never thought I would end up with 20 percent interest rate. Is this what bankruptcy filers should expect from car dealerships. This Cadillac dealership has a good rating with BBB. Nothing but rave reviews. However I still feel I was ripped off unless you guys can convince me that there was no other way. Also, by the time the finance guy at Cadillac came back in to talk to me, he also told me that Capital One was the only people who would take the deal and since I know that I was in to them for 8,000 dollars, somehow I just know that they tacked that amount on to my car deal. I can not prove it, but I know it deep down in my gut. So two things will happen here since the final amount I pay back over 72 months in interest is more than the car is worth, I am either going to the local investigative television stations and have them check my story for the legalities involved, or I will listen to you guys if you say that in these 2 weeks and I.m not satisified with this deal, there is absoultely nothing I can do. Somebody please talk to me. I am stressed out. They would not even make the car certified used, just pre-owned used and the difference between those two is the warranty. That was the most inportant thing I needed.

6ftladycop....I'm not following your logic here. Aren't you a cop? The only reason I ask is that you should be good at smelling BS!. If you didn't like the deal then why did you sign the contract?? If you go to an investigative news agency you'll going to embarrass yourself. From my understanding leasing requires a good to excellent credit. If Capital One was the only one that wanted your business then obviously your credit isn't very good.

Also car dealers do make $$ on leases or the wouldn't do them. The only downside to leases is they can create large inventory. Obviously if the cars are just sitting around they're not making any money. Sounds like you believed the salesman a little too much. Salesman are full of sh*t....they tell you whatever you want to hear or what ever is going to make you buy! There's no such thing as a "nice" salesman! Instead we'd call him a great salesman, they're supposed to be nice, its called building rapport!

Also 20% for a BK isn't high. I pay almost 17% with Capital One and I'm not even BK'd yet! I have good credit but high revolving debt and like you Capital One was my only choice. When you need a car sometimes you have to sacrifice. I'm only financing 8,000 so 17% is nothing. I'm going to pay for a year and then try to refinance. Lastly, everyone pays more than the car is worth unless you pay cash, that's the whole point of credit and financing, they're trying to make money. Sorry if I was harsh but not seeing your view point.

Ok...anticipating filing...and just wondering how all this has changed in the last few years since the economy is in such a nasty mess. Has the stigma of bankruptcy changed any? Is anybody lending at all or will life come to an end?
I'd prefer to get everywhere on a horse, but I realize they're just not safe on the highways...