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

[tobee43]

Wow... backtoschool and I agree on something! This is well said and I just wanted to requote this to everyone else. Rebuilding credit is not a sin and is not stupid. Living on cash is equally ok based on your personal beliefs and how you manage your money. There is a reason people don't usually discuss money with their friends and family because its a touchy subject and you can piss people off easily.

Some of you may get by just fine without credit but sometimes it is useful and helpful to have good credit. Just because people want to use credit and rebuild it doesn't mean they haven't learned anything or will get themselves in a mess again. Can it happen? Sure...anything is possible. It is also possible for you to get hit by lightening when you go outside...does that mean you never leave the house?

Just recently I obtained my top secret clearance with my bankruptcy fresh from last year. One of the reasons I was able to get this with the BK so new was because of my otherwise good credit history and that I had repaired it well in the last year. Also, I was just recently approved for an apartment at a brand new complex with the bankruptcy on my report. They said BK is not an automatic denial and I was approved with no additional security deposit or any fees because my credit is in good shape.

If the rest of you who don't use your credit or rebuild it would be fine with paying a giant security deposit at an apartment complex, then more power to you. But if I can use my credit to save money in insurance, rates, approvals and my clearance...then I damn sure will.

[Amy26]

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.

Wow... backtoschool and I agree on something! This is well said and I just wanted to requote this to everyone else. Rebuilding credit is not a sin and is not stupid. Living on cash is equally ok based on your personal beliefs and how you manage your money. There is a reason people don't usually discuss money with their friends and family because its a touchy subject and you can piss people off easily.

Some of you may get by just fine without credit but sometimes it is useful and helpful to have good credit. Just because people want to use credit and rebuild it doesn't mean they haven't learned anything or will get themselves in a mess again. Can it happen? Sure...anything is possible. It is also possible for you to get hit by lightening when you go outside...does that mean you never leave the house?

Just recently I obtained my top secret clearance with my bankruptcy fresh from last year. One of the reasons I was able to get this with the BK so new was because of my otherwise good credit history and that I had repaired it well in the last year. Also, I was just recently approved for an apartment at a brand new complex with the bankruptcy on my report. They said BK is not an automatic denial and I was approved with no additional security deposit or any fees because my credit is in good shape.

If the rest of you who don't use your credit or rebuild it would be fine with paying a giant security deposit at an apartment complex, then more power to you. But if I can use my credit to save money in insurance, rates, approvals and my clearance...then I damn sure will.

[WhoDat]

That is the reason we will be getting a CC card again. Our state is BASED ON YOUR CREDIT rating for car insurance and we figure if hubby can not find a job by the middle of 2011 then we will have to move and we will need have way decent credit to even rent a place to live. We were always good at budgets and watching our monies it was double job loss and 5 years of taking pay cuts for both of us that did us in

You can add employment to that list. My last two jobs required credit checks. Some banks are also starting to pull hard inquiries in addition to the Chex System just to bank with them.

[Fallonedward]

That is the reason we will be getting a CC card again. Our state is BASED ON YOUR CREDIT rating for car insurance and we figure if hubby can not find a job by the middle of 2011 then we will have to move and we will need have way decent credit to even rent a place to live. We were always good at budgets and watching our monies it was double job loss and 5 years of taking pay cuts for both of us that did us in

except one thing....like this state for car insurance it is BASED ON YOUR CREDIT rating...

and until congress passes reform that changes the fact a person gets charged either a higher or lower rate simply because they have good or bad credit....we'll need credit. like it or not.

backtoschool is correct as usual....however in this case we have NO choice!!

as much as i don't ever want a cc's again!!

[LSUTiger32]

For me, having a credit card is like having C4 in my pocket. It is super dangerous. I would tell myself that I would pay it off each month. Then we would have some emergency (never had savings...blew through it all) and guess what? I would be unable to do so. Research has shown that people also spend 8% more when purchasing items with a credit card. So if you are using the "I gain 4% cash back.", then not really. I personally will never own another card. Getting my first credit card at 18 years old was the worse decision that I have ever made.

Dave Ramsey is good. Most people that dog him on here, are never going to conform. Financial Peace University has changed our lives. Yes we are going through BK, but with FPU, I'm not sure we could have made our budget work. We have had to change our spending habits and behavior. Since we have been using cash for all of our purchases, we find that we don't want to spend money. The idea of having money put back is thrilling. I will never finance another car. Another thing Dave suggests that if you buy a home, you only do when you have 20% down. There is no a bank anywhere that will turn you down when you have that large of a down payment, and you will get a good rate.

Way to go! Remember, like Dave says you are weird. Even on a forum in which credit and loans took every single one of us down you are a simpleton.....you aren't using credit, the almighty powerful financial tool!

[CCsAreEvil]

Our credit scores were no more than 615 (one bureau showed 575) for either of us. We got the lowest prime rate mortgage which at the time was 5.25%.

Wait what?! I was blown away after reading this. Like backtoschool referenced, there's probably no way someone would be able to obtain a mortgage loan with the best rates today with those scores. It must have been some "distant" year in the past that you got this.

[backtoschool]

Before my husband and I got into all this mess. The house that we own now (giving it up in BK) we used 20% down. Our credit scores were no more than 615 (one bureau showed 575) for either of us. We got the lowest prime rate mortgage which at the time was 5.25%. There is little risk for the bank when you give them equity. We also didn't have any credit cards at the time and our loan officer told us that was a big plus. When you have low credit and getting credit cards shows that you are more of a risk.

Our mistake was getting more house then we could afford and then going out and get a new $44K SUV. Next time I will only buy a house with at least 20% down and only a 15 year mortgage. It is all about living within your means.

Yes it's definitely about living within one's means, but also underwriting standards were much more lax several years ago. Those scores and credit history would not get you that house and car today. Underwriting is more conservative.

[addisonsmom]

Hello addisonsmom,

I agree with pretty much everything you posted except for the last part. Could you possibly cite your source on your comment I quoted? I am almost 8 years post BK and I had a totally different experience with purchasing a home a few years ago. This was during the time when they were approving everyone for a mortgage. Perhaps you had a different experience?

Good Luck with your BK

Before my husband and I got into all this mess. The house that we own now (giving it up in BK) we used 20% down. Our credit scores were no more than 615 (one bureau showed 575) for either of us. We got the lowest prime rate mortgage which at the time was 5.25%. There is little risk for the bank when you give them equity. We also didn't have any credit cards at the time and our loan officer told us that was a big plus. When you have low credit and getting credit cards shows that you are more of a risk.

Our mistake was getting more house then we could afford and then going out and get a new $44K SUV. Next time I will only buy a house with at least 20% down and only a 15 year mortgage. It is all about living within your means.

[TheExpert]

For me, having a credit card is like having C4 in my pocket. It is super dangerous. I would tell myself that I would pay it off each month. Then we would have some emergency (never had savings...blew through it all) and guess what? I would be unable to do so. Research has shown that people also spend 8% more when purchasing items with a credit card. So if you are using the "I gain 4% cash back.", then not really. I personally will never own another card. Getting my first credit card at 18 years old was the worse decision that I have ever made.

Dave Ramsey is good. Most people that dog him on here, are never going to conform. Financial Peace University has changed our lives. Yes we are going through BK, but with FPU, I'm not sure we could have made our budget work. We have had to change our spending habits and behavior. Since we have been using cash for all of our purchases, we find that we don't want to spend money. The idea of having money put back is thrilling. I will never finance another car. Another thing Dave suggests that if you buy a home, you only do when you have 20% down. There is no a bank anywhere that will turn you down when you have that large of a down payment, and you will get a good rate.

Dave Ramsey has very good advice. I disagree on his CC stance though. CC's are a tool and very beneficial if used properly. 20% down is perfect downpayment. If lenders of CC's and mortgages didn't issue a mortgage,HELOC or CC's to those who should have never had them in the first place, this country would not be in this financial mess.

[WhoDat]

There is no a bank anywhere that will turn you down when you have that large of a down payment, and you will get a good rate.

Hello addisonsmom,

I agree with pretty much everything you posted except for the last part. Could you possibly cite your source on your comment I quoted? I am almost 8 years post BK and I had a totally different experience with purchasing a home a few years ago. This was during the time when they were approving everyone for a mortgage. Perhaps you had a different experience?

Good Luck with your BK

[addisonsmom]

For me, having a credit card is like having C4 in my pocket. It is super dangerous. I would tell myself that I would pay it off each month. Then we would have some emergency (never had savings...blew through it all) and guess what? I would be unable to do so. Research has shown that people also spend 8% more when purchasing items with a credit card. So if you are using the "I gain 4% cash back.", then not really. I personally will never own another card. Getting my first credit card at 18 years old was the worse decision that I have ever made.

Dave Ramsey is good. Most people that dog him on here, are never going to conform. Financial Peace University has changed our lives. Yes we are going through BK, but with FPU, I'm not sure we could have made our budget work. We have had to change our spending habits and behavior. Since we have been using cash for all of our purchases, we find that we don't want to spend money. The idea of having money put back is thrilling. I will never finance another car. Another thing Dave suggests that if you buy a home, you only do when you have 20% down. There is no a bank anywhere that will turn you down when you have that large of a down payment, and you will get a good rate.

[LSUTiger32]

LSU, read what you said above...The one time your payment is late because of their error or because they don't post your payment correctly....

USAA would take care of this if it arose..

Logan

OK then, they are the best. I am going to apply for one now.

[LSUTiger32]

LSU, see above post.

In my case USAA isn't really loaning me money. I use a credit card for more reasons than the cash back and I'll always have the cash to pay it off every month.
Why use a credit card?
1) It's easier to track expenses.
2) I don't have to carry much cash.
3) I don't get change that has to jingle in my pocket
4) I get 1.25% cash back
5) I get to keep more money in my 3% APR checking account
6) I want to

Well whoopdie doo and good for you.

1) Excuse
2) Excuse
3) Excuse
4) Excuse
5) Excuse
6) Ooooooohhhhh......you got me on that one.

I am glad you love those credit cards. More power to ya.

[Logan]

So, exactly what do you mean by taking care of their customers? I mean what can really do for you? Loan you money you obviously don't need? I must be missing the point.

LSU, see above post.

In my case USAA isn't really loaning me money. I use a credit card for more reasons than the cash back and I'll always have the cash to pay it off every month.
Why use a credit card?
1) It's easier to track expenses.
2) I don't have to carry much cash.
3) I don't get change that has to jingle in my pocket
4) I get 1.25% cash back
5) I get to keep more money in my 3% APR checking account
6) I want to

[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.

LSU, read what you said above...The one time your payment is late because of their error or because they don't post your payment correctly....

USAA would take care of this if it arose..

Logan