What should I expect after discharge?

[angel2002]

I have a question on what we should expect when our chapter 13 is discharged in the next 2-3 months. We financed a vehicle about 2 weeks ago with the first payment due Oct 29th. From what we understand this loan will be reported on our credit. The lender agreed to waive trustee approval since our plan is nearly complete and we are having the trustee payments taken from hubby's check each week. Other than our mortgage (which isn't reporting) this is the only open account on our reports.

When we went to the dealership we were obviously denied by a few lenders. Two lenders agreed to finance us at a whopping 19% interest rate! Without any other options and now down payment we had to agree to the terms. Keep in mind we are not going to be keeping this vehicle but we will be refinancing it as soon as our credit scores improve.

Our mortgage isn't reporting and from what I understand even after we receive discharge it will probably still won't. Considering this, if we do not apply for or receive any other credit will the car loan be sufficient enough to bring our scores up over the period of 6-8 months post discharge? The reason I'm asking is that we do want to refinance this car but I don't know what steps we should realistically take to bump those scores up enough to do it.

Our scores right now are pretty bad. The dealership said we were at 519 for Transunion so I'm sure the other bureaus were hovering around that mark as well. The hope is that our scores will at least improve to 620-630 range by April or May next year and perhaps high 600's 1 year from discharge. Is that too unrealistic?

What steps do you think we should take? Credit cards? Secured loans?

[TXskyblue]

Secured credit card would be good. You can 1-2 at some credit unions and get a secured CC and a secured installment loan, with only having to front 1 security deposit.

Say you have $1,000. You use that to secure an installment loan with your credit union. They take your $1,000 and lock it away. Then they loan you $1,000. You take that money and use it to secure a credit card for $1,000. You now have two tradelines, a CC and an installment loan, with only 1 security deposit. NFCU does this and so do other credit unions. Ask!

[AngelinaCat]

Sorry, but I am going to "rain on your parade". You are just coming out of a CH13 in a few months, and you want to do what?

Go back into debt to a Credit Card? Why?

Yes, I know. I have read and heard all the excuses...

[angel2002]

Hi AngelinaCat

Actually we never did have an issue with credit card debt in the 14 years we've been married. We always managed our money pretty well up until I got laid off. We exhausted our savings and I finally found a job but it was for significantly less than my previous one. It was no more than 2 months at my new job that we received a letter from a lawyer stating that we were in the beginning stages of foreclosure. I am paid bi-monthly so it was nearly 3 weeks before I had even received my first paycheck so the timing couldn't have been any worse. The damage was done.

We only had 2 credit cards each when we filed and the total owed on them was less than $6k. With my old income that was equivalent to about 1 1/2 months of my paychecks. I'm sure a few hundred or so of that was late fees since we started missing payments. The cards themselves were only about 5 years old prior to filing.

I'm looking at re-establishing credit so that it will be there when we need it. Yes we could absolutely live on cash only the rest of our lives and I would be perfectly happy with that. However I like to know that something is available when I need it. When there's something I want trust me I save for it. I talked myself out of an $20 shower curtain last weekend because I couldn't justify the price.

Considering that just about everything depends on credit anymore I don't want to be stuck with having only 1 option and no bargaining power.

[Pizza]

I'm thinking on time payments on your car should be good enough for improving your credit.