Restablishing credit

[MARKETSACRIFICE]

Hello all, Happy Thanksgiving.

I have a question regarding restablishing credit.

This isnt something i want to go around asking prior to filing, so i thought it would be best to draw from the experience here.

One of my ideas post BK, is to take out CD's say $2500 each at two or three different banks.

Then take out a $2000 loan secured with the $2500 CD at each bank.

Anyone done this? It makes fiscal sense for the bank, but i dont know if it is taboo b/c of the BK.

also, will your major banks do a secured credit card? maybe in the same scenario? $2500 deposit or CD in exchange for CC.

Would these scenarios be more attractive to a "local" bank or major bank?

ANy insight is appreciated.

Thank you!

[lrprn]

Anyone done this? It makes fiscal sense for the bank, but i dont know if it is taboo b/c of the BK.

Frankly you aren't going to get loan money from any bank (local or national) having filed bankruptcy recently before asking. Even folks with sterling 800 credit scores can't get a loan right now and the financial picture is looking very grim for months, probably years, into the future.

You would have just gotten out of bankruptcy. Why do you deliberately want to drive yourself back into debt right away? This violates ones of the cardinal rules that bankruptcy teaches us - not to over-extend financially ever again. What you are proposing is just that.

[relief13035]

Don't rush things. Give yourself time to enjoy a debt-free life.

[MARKETSACRIFICE]

im not really looking to "use" credit. Just trying to restablish after the BK.

Using the actual loan to service the note, figure it would cost a couple hundred bucks with interest over the term.

I dont care to ever get in CC debt again, ever. But i do very much care about purchasing a home as soon as it is feasable or i am deemed credit worthy.

[lrprn]

im not really looking to "use" credit. Just trying to restablish after the BK.

The only thing that truly re-establishes credit after filing is keeping your payments on time for at least a year, maybe two, depending on your credit history before filing. I still think it's very doubtful you can get a loan from anywhere within six months to a year of filing, even with an excellent on-time payment record.

You can't qualify for an FHA home loan for a minimum of two years after filing, and FHA loans are the easiest ones to get for former filers.

The best thing you can do after your discharge is start cleaning up your credit reports. Let time heal the bk wounds for a year or two while you save up at least a 20% downpayment. Then you'll be set to hit the home loan market with a good chance of success.

[chloe0724]

I think the original OP was planniong on using the cash in the CD's he has with the bank to secure his loan. I work for a large bank, and we stopped doing those types of loans about a year ago. We got no explaniation.

I would seccoment a secured credit card.

[vman521]

im not really looking to "use" credit. Just trying to restablish after the BK.

Using the actual loan to service the note, figure it would cost a couple hundred bucks with interest over the term.

I dont care to ever get in CC debt again, ever. But i do very much care about purchasing a home as soon as it is feasable or i am deemed credit worthy.

You need to wait aprox 3 years and then you can purchase a home under the FHA program. I would probably look more in the direction of getting a secured credit card and paying it off every month.

[dingdong]

I think possibly banks may have stopped doing these types of loans because there are credit repair services that offer to do this for you for a fee. MAybe they caught wind of it and stopped allowing it as it is a way to semi-artificially raise your score.

Basically you are borrowing against your own money. They have you deposit cash in a CD, borrow on a portion of it with the CD as collateral and then have you make payments on it for say 6 months, close the account, paying off the balance with the CD , pay fees, take the money from the CD and do it all over again, creating a higher score with the payment history.


So after a year , you can have multiple trade lines with positive payment history

I recently saw some kind of promo for this type of service online. The fee was enormous and they promised to raise your score to a 700 minimum i believe, but I could be wrong.