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Outline for Rebuilding Credit

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    Outline for Rebuilding Credit

    The following is kind of a distillation of various bits of post-discharge advice (from my "do as I suggest, not as I did" department) I've helped other folks out with:

    Following your discharge:
    • Wait 6 weeks and then get copies of all three of your credit reports from
    • Go through those reports with a fine-toothed comb and make sure all accounts which were open when you filed for bankruptcy are showing some sort of an IIB (Included In Bankruptcy) notation and the amount owed is $0.00; if not, contact the lender and/or the Credit Reporting agency and ask them to update your reports.
    • Once you confirm all of your discharged debt is properly reporting, you can start applying for credit (technically you could have started the day of your discharge, but it is best to let the dust settle a bit first; some folks get approved right away, others, me included, get lots of rejections).
    • CapitalOne is a good first stop for credit; of late they have been widely reported to grant their no annual fee Quicksilver 1.5% cash back card to those with fresh discharges, and often the starting unsecured credit limit is $3,000.
    • If you can afford it, I would also recommend a “high limit” secured card with a $5,000 limit (and identical security deposit). Getting such a card helps from the perspective of you showing a high(ish) limit card on your credit reports, it can also be handy when the card graduates to unsecured as the limit will remain unchanged, you’ll just get your security deposit back. Good secured card financial institutions include, but are not limited to, FNBO, TDBank, NFCU, Discover, and of late, US Bank.
    • With two cards in hand, you’ll still want a third as three cards is widely considered to be the minimum number to have to gain the most points for your credit scores. Credit Unions are a good place to look for this card, I got my third from PenFed, Navy Federal is also another favorite if you didn't burn them.
    • The next decision you’ll need to make is what to do about an installment loan; you’ll need a minimum of one for credit score improvement purposes. A mortgage, car loan, or personal loan all qualify as installment loans; if you don’t have either a mortgage or car loan, a good starter installment loan is an SSL (Secured Share Loan) from the likes of NFCU or PenFed.
    • With three credit cards in hand, and an installment loan, your next stop should be into the proverbial garden, basically, let the credit accounts you have age and watch your scores grow; hang out there for at least a year and you’ll be much better able to score car loans and mortgages at good rates.
    Feel free to add other helpful tips to this thread for those rebuilding after their discharge.
    Latent car nut.

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