Why do people think they need to establish credit right after bankruptcy?

[backtoschool]

There is nothing wrong with establishing credit post bk. Those who do not want to do so, do not have to do so. I look at all of the people having to justify their perfectly legitimate and sound credit rebuilding behavior, just because a few judgmental people keep trolling these threads to preach their so called virtuous credit behavior to the rest of us.

To everyone who is rebuilding their credit in order to save money on insurance, or who is wanting to buy a house or car at the best rate, thank you for posting your experiences and sharing your info with the rest of us so that we can pool our knowledge and grow stronger as a group of post-bk consumers. I will continue to share my experiences as well, and I hope they will be of some use to those who share my goals.

To those who feel the need to patronize and preach to the rest of us, enjoy the power of your much bragged about self-control, and stay away from the credit repair threads just like you stay away from credit cards.

[pris72]

I have never owned a home, and the only way to build up credit to show credit worthiness is to get a couple of CC's and make sure that they are paid each month. I learned this one in credit counseling. If I did not get any type of revolving credit showing a steady payment history, my chances of getting approved for a mortgage will be pretty low in 2 yrs. I am looking to my future, and this is what I have to do to ensure that we are able to buy a home in a couple of years. I sure do not want to grow old renting. I do what I have to do for my situation, just as others do what needs to be done for their own personal situations.
Facts are here that many,many things revolve around your credit score and having some sort of positive revolving payment history.

[backtoschool]

Well said.

My guess is that those who posted that they use the card to get $$ back do not pay off the credit card each month. Assuming I am correct (and even if I am not). . .

So many consumers fall that "crap". I am absolutely amazed how gullible we are. 2% back but if you don't pay the account in full within the grace period you are charged 22+%. . . so now it's 20+%. Wow, what a deal. Oh, and what about those teaser rates? 0% for 1st 6 months on balance transfers. Then 22+% and if you are a day late, 30+%. Such a deal. If you buy into it I have a bridge to sell. Give me a call.

Why on earth would you want to pay for the privilege of delayed payment? If you really want to take advantage of the "gift" the credit card industry is giving you, use the credit card and pay 100% within the grace period. That way your money stays in the bank earning piddly interest for as long as possible while you use the credit card industry's money and never pay a dime for it AND you still get your 2% back. Now that's "sticking it to em".

Des.

I agree Des. I have a 2% cash back card and that is exactly what I do. I always pay in full at the end of the month. It's like using a debit card, only I get to repair my credit and I get rewards for using the card.

[Logan]

Why on earth would you want to pay for the privilege of delayed payment? If you really want to take advantage of the "gift" the credit card industry is giving you, use the credit card and pay 100% within the grace period. That way your money stays in the bank earning piddly interest for as long as possible while you use the credit card industry's money and never pay a dime for it AND you still get your 2% back. Now that's "sticking it to em".

Des.

I forgot to mention that the money that remains in my bank account during the grace period earns a "piddly" interest of 4%.

I'm not trying to 'stick to them'. I'm trying to save money!

Logan

[Logan]

Well said.

My guess is that those who posted that they use the card to get $$ back do not pay off the credit card each month. Assuming I am correct (and even if I am not). . .

So many consumers fall that "crap". I am absolutely amazed how gullible we are. 2% back but if you don't pay the account in full within the grace period you are charged 22+%. . . so now it's 20+%. Wow, what a deal. Oh, and what about those teaser rates? 0% for 1st 6 months on balance transfers. Then 22+% and if you are a day late, 30+%. Such a deal. If you buy into it I have a bridge to sell. Give me a call.

Why on earth would you want to pay for the privilege of delayed payment? If you really want to take advantage of the "gift" the credit card industry is giving you, use the credit card and pay 100% within the grace period. That way your money stays in the bank earning piddly interest for as long as possible while you use the credit card industry's money and never pay a dime for it AND you still get your 2% back. Now that's "sticking it to em".

Des.

Repeat after me. I pay off my credit card every month! When I total what I have for liquid cash every month I have already subtracted out the credit card balance. Take a look at Mint.com. That's what I use and I only have my checking, savings and credit cards on Mint so when I wake up in the morning and update mint I only look at one number and that's my savings plus my checking minus my credit cards. I don't care how much I've charge on my credit cards as long as I have MY minimum number at the bottom of the page.

And did I say that I pay off my credit card every month and last months rewards were $77?

What can you do with $77?

Logan

[Logan]

Logan.....reading some of your posts I think you are pretty intelligent and have a handle on your money and finances now......like a lot of us do post-BK. I am just wondering why you take the risk of credit cards to get 2% cash back on gas and groceries. You didn't really fall for that did you? The one time your payment is late because of their error or because they don't post your payment correctly they are going to charge you interest plus fees wheich would probably wipe out a year of 2% cash backs. Not only that, but no one has ever gotten rich off of that 2%. To make matters worse for you, I get 4% back on my checking account just for taking an electronic statment and doing a direct deposit once per month! More back and NO RISK!

Don't be that guy falling for the credit card cash back offers.

1st, I have had credit cards for 20 years and never been late once so why would I even consider being late. I have checked the box at USAA to automatically deduct the FULL payment owed on the due date. If it's late it's the banks fault and having done business with USAA for 25 years I am confident they would take care of me.

2nd, I also have a checking account that get 4% interest. I have it maxed out to 25K and the rest of my money in a savings at .75%.

3rd, My rebate from using my credit card last month is $77 dollars. Yes, 77 dollars. Let me say that again....77 dollars!!! Do I need to explain why I use this credit card.

While $77 is on the high side I generally get $40 a month cash rewards which is also Tax FREE. That 4% interest you and I receive from our Rewards Checking account is taxed.

It's funny how critical most here are of me but really I'm just trying to show you guys how to keep more money in your pockets.

Things I do to keep more money in my pocket:
Pay my Auto Insurance once a year: $4 a month
Pay my Life Insurance once a year: $5 a month
I have OOMA for a phone. $200 then free forever (I've had it a year so it's already paid for itself).
Thanks to OOMA and Skype I pay $66 a month for my Iphone. 450 minutes plus rollover, 200 text, unlimited Internet
No cable--HULU Plus instead...$53 a month savings.

Oh yeah, I get 1.25% cash back on purchases, 3% on gas, and rebates going through the banks shopping website. I recently bought a monitor for my wife through USAA's website at Tiger Direct and received 6% rewards shopping on top of the 1.25% cash back for the purchase.

LSU some of my savings are very small, some are very good. If you do the math on all the things I've done to save/earn money every month it adds up. It all seems pretty smart to me.

Logan

[despritfreya]

Logan.....reading some of your posts I think you are pretty intelligent and have a handle on your money and finances now......like a lot of us do post-BK. I am just wondering why you take the risk of credit cards to get 2% cash back on gas and groceries. You didn't really fall for that did you? The one time your payment is late because of their error or because they don't post your payment correctly they are going to charge you interest plus fees wheich would probably wipe out a year of 2% cash backs. Not only that, but no one has ever gotten rich off of that 2%. To make matters worse for you, I get 4% back on my checking account just for taking an electronic statment and doing a direct deposit once per month! More back and NO RISK!

Don't be that guy falling for the credit card cash back offers.

Well said.

My guess is that those who posted that they use the card to get $$ back do not pay off the credit card each month. Assuming I am correct (and even if I am not). . .

So many consumers fall that "crap". I am absolutely amazed how gullible we are. 2% back but if you don't pay the account in full within the grace period you are charged 22+%. . . so now it's 20+%. Wow, what a deal. Oh, and what about those teaser rates? 0% for 1st 6 months on balance transfers. Then 22+% and if you are a day late, 30+%. Such a deal. If you buy into it I have a bridge to sell. Give me a call.

Why on earth would you want to pay for the privilege of delayed payment? If you really want to take advantage of the "gift" the credit card industry is giving you, use the credit card and pay 100% within the grace period. That way your money stays in the bank earning piddly interest for as long as possible while you use the credit card industry's money and never pay a dime for it AND you still get your 2% back. Now that's "sticking it to em".

Des.

[Pandora]

What I don't understand is why the need to judge others. Your thought is to not have credit and that's fine but why and try to put others down because of your preference. In MI credit is used to obtain your auto insurance rate and it makes a difference if you have no credit, bad credit, or good credit. Let's just all allow each other to do whatever we deem necessary for our lives. Right now I haven't filed and my insurance rate because of the late pays is high, not because i have tickets and accidents but because my credit is poor. So yes after filing I want to learn how to use credit reponsibly so i can get better rates on my insurance and so yes in the future i can buy a house. I'm just saying let's not judge others!

I dont know if you're directing this at the OP or at me - but if its meant for me - I wasnt judging anyone. I was merely pointing out that not everyone see's credit and FICO as important. What works for one person may not work for another - in the end, its not about having or getting credit - its about learning to live within your means and to budget appropriately. For many, its very hard - the temptation of a credit card outweighs "yes I had a BK, but...."

Oh tell me about it - isnt that credit profiling a PITA? Ugh - ours went up all the way around (auto and home). Sucks for sure, but - for me - I'd rather pay a little extra right now than worry about reestablishing at this point. My BK wont be on my credit report forever and my rates will go down, maybe not as fast as I'd like them to, but eventually they'll get back to where they were

[Flamingo]

One needs to reestablish good credit after a bankruptcy to show they are creditworthy again to be able to obtain a house, lower insurance rates, be able to qualify for certain jobs. be able to get low or 0% interest rates on new cars, etc., just to name a few. Unfortunately, credit is part of today's world and a credit card does not use itself - it has to be used by somebody so the issue is how one handles their own finances when it comes to credit. Go crazy with the credit cards or live beyond one's means and it spells nothing but trouble if you cannot afford it or lose your job and can't pay the bills.

There is nothing wrong with taking the time to reestablish one's credit after filing or getting a few credit cards to do that...it's how it is handled. If one is not prudent and learns how to handle that credit or their finances, that person will be back on the bankruptcy forums posting again in several years wondering what happened.

[LSUTiger32]

Logan.....reading some of your posts I think you are pretty intelligent and have a handle on your money and finances now......like a lot of us do post-BK. I am just wondering why you take the risk of credit cards to get 2% cash back on gas and groceries. You didn't really fall for that did you? The one time your payment is late because of their error or because they don't post your payment correctly they are going to charge you interest plus fees wheich would probably wipe out a year of 2% cash backs. Not only that, but no one has ever gotten rich off of that 2%. To make matters worse for you, I get 4% back on my checking account just for taking an electronic statment and doing a direct deposit once per month! More back and NO RISK!

Don't be that guy falling for the credit card cash back offers.

[vrspartak]

If I wasn't planning on buying a house in the next several years, I too would never touch anything that had to do with credit...However, based on my research, a person does need to have at least a decent score and some TLs to get a good mortgage.

[kartoons19]

I do want to build my credit after discharge because I would like to get a house at some point. Plus given that my car is 11 years-old, I know I will need a car within the next few years. I would prefer to pay cash, but it would be nice to have options. My plan is to clean up my credit reports and get one CC and pay it off every month. I do agree that credit is tool, but like any other tool it can be helpful or harmful. It's not the credit itself that is bad, it is all in how we use it. I think we can all probably agree that what is truly important is to build up a cash reserve. All I know is I have learned my lessons (although frivolous credit use was not the reason I filed), and will never be a slave to credit again. Even with a mortgage or auto loan I plan on putting down a hefty down payment and spending within my means.

[Logan]

But aren't your cards off of your wife's credit and you're just an AU? So technically - the rates and cards you have arent really "yours" - they're your wife's and she didnt file for BK, correct? There's a big difference I think in what the OP means by this topic vs. what you've done/are doing Logan.

+1 on LSUTiger's post

And...I had 4 credit cards within the 1st year after my discharge well before I was married. Credit is a tool......

Logan

[Logan]

But aren't your cards off of your wife's credit and you're just an AU? So technically - the rates and cards you have arent really "yours" - they're your wife's and she didnt file for BK, correct? There's a big difference I think in what the OP means by this topic vs. what you've done/are doing Logan.

+1 on LSUTiger's post

This particular card is my wifes. But I have a Capital One card that gets 2% back on Gas and Groceries, 1% on everything else. We've just decided to use my wifes with the 1.25% back and the rewards shopping.

Logan

[felice]

well i need to because im trying to get an auto loan in march of next year. so i have to show some sort of new payment history and how can i do that if i dont have credit reporting with the bureaus...? so its a preference i guess in what your goal is.
i have learned alot though from this board and this whole process that i've had to go thru. i am going to be responsible THIS time. it takes only a minute to mess your credit up! but forever to repair it...