Is it possible to start rebuilding credit while still in a Chapter 13?

[greenthinker]

Hi Everyone,

I was wondering if there's anything that my wife and I can do to begin rebuilding our credit before our Chapter 13 ends, 15 months from now. We have applied for both a secured and an unsecured credit card (with our attorney's approval), and been turned down for both. I can understand being turned down for the unsecured...but the secured?...Seriously? We are making on-time loan payments on our camping trailer, which we are paying outside of our plan. Does that go toward rebuilding our credit? Or, does that only count after the discharge?

Thanks in advance for your feedback!

[LadyInTheRed]

If the lender is reporting your timely payments, it will help your credit score. The passage of time after your filing date should help too. But, if you can't use and payoff more credit, your ability to do anything else to improve your score is limited.

I'm fortunate because my husband didn't file BK and has a credit card in his name. He made me an authorized user and he uses it to pay expenses and we pay it off every month as soon as we get the bill. That activity is showing up on my credit report. If you have a relative who you trust and who you can talk to about these things, you might ask them to add you as an authorized user on their account. They don't even have to give you the card. They just need to use theirs, keep utilization low and pay on time. The risk is that they keep balance that are too high or default and harm your credit instead of helping it.

[greenthinker]

Thanks, LadyInTheRed...I will look into that!

[andy158]

We are making on-time loan payments on our camping trailer, which we are paying outside of our plan.

Excuse me for going off topic here, but how in the world did you get to keep a camping trailer in a 13? We had to surrender a fishing boat and motorcycle because they were "unnecessary" debts. I argued that I used the motorcycle for commuting to work 9 months out of the year and it really saved me gas (It got 55mpg), but no go.

As far as building credit scores during bk? Our has increased on its own for paying our debts outside the bk on time (house, car, etc.). It is currently 658. I wouldn't try to apply for credit until after discharge. You will end up with "loan shark" rates and outrageous fees. Believe me we have researched this.

[greenthinker]

andy,
Our Ch. 13 plan pays back 100% of our unsecured debts, and since we have enough income left over to handle the trailer payments, the trustee did not object to our keeping it. We did have a boat that we surrendered, however.

Thanks for your reply...we can wait another 15 months until discharge to apply for credit cards.

[Staceyt]

So the trustee doesn't mind if you are an authorized user on someone else's card?

[LadyInTheRed]

So the trustee doesn't mind if you are an authorized user on someone else's card?

As long as you are not incurring debt, it shouldn't be a problem. An authorized user is not responsible for the debt incurred. Ask your attorney to be certain.