Will on time student loan payments and a reaffirmed car lease help scores?

[kl030505]

I'm kind of hoping to avoid getting a credit card for a while. I don't want to have to pay a fee and I'd prefer not to deal with secured cards. After we are discharged, our debt will be wiped clean other than student loan payments (which are current and will continue to be) and my auto lease, which we are reaffirming (also current, always has been, always will be). I don't know my actual score at the moment, but I'm still getting pre-approved offers in the mail on a daily basis despite having 3 or 4 charged off accounts and delinquent payment history on a bunch and being maxed out on basically every card. However, my credit history is over 7 years old and up until 2 years ago was great. There are a number of accounts in good standing still.

Anyway, what do you think? Can I lay low for 6 months after discharge and just let the auto lease and student loan payments bring my scores up or is getting a cc really the best thing to do?

[chpxiii]

One of the things that creditors (of course!) and the fico people suggest (of course!) is that in order to rebuild credit is to start as soon as possible after discharge. Well, other credit experts agree with this as well.

The reason being is that age is an important factor in your credit score.

Now, I'm with you in that I don't want a credit card. But I'll start due to the fact that I want to buy a house soon and so I need to activelly start rebuilding my credit as soon as I can.

If you have no need for credit or a higher credit score, or simply do not want it, then really, there is no reason to get credit cards. If your student loans are helping to age your credit report, then that may be all you need. It depends on what you want to do. I know that one of the loans on my report that's helping to age it is my student loans. My credit report (although I've had things reported on there longer than that) is about 12 years old.

Remember, age is a large factor in your credit score.

As for still receiving offers, my idea on that is: credit card companies know that you (might) want to start rebuilding credit as soon as possible (as is suggested because age on a credit report helps FICO scores) and further, since you've recently filed bankruptcy you can't file again for a while, they're still willing to extend you credit.

For a "nominal percentage fee" of course!

I don't know what your future purchasing plans are, but if you feel no need for credit, or don't even want it, there is no reason to take on new credit cards right now. Keep in mind there are some cards with no annual fees, and even after sometime of discharge, paying mainly on student loans and having those report ok, you'll start to get better credit card offers too.

[kl030505]

We don't anticipate being ready to purchase a home again for 5-7 years. I want to have a 20% downpayment before we purchase (for my own mental health!) and that means we have to save between $60K and $80K (EEK!) because of market prices here.

I sort of figured that once I'm discharged, if I have the auto lease for the next year and a half and after that will probably have a SMALL car loan for a used car, and the student loans, that would be enough to get me to one of the no annual fee offers eventually. I'm not particularly opposed to having a credit card again, I'm not irresponsible with credit, that's not really what got us into trouble, I am just not going to pay an annual fee (I've never paid one, I'm not going to start now!), and I'd prefer to skip the secured card stage.

At this point, my credit history is about 11 years. The first 9 are all good. THe last 2 suck.

Sounds to me like you are confirming my suspicions if I'm not looking to do anything major until 5-7 years post filing waiting a year to get a CC (so that I can get a no annual fee offer) is probably not going to hurt too much in the long run.

Thanks.

[HHM]

Just an FYI, Student loans are of very little value on your credit report. The weight they are given in your FICO calculation is minimal and creditors don't view student loans as "real" credit. The reason being, it does not take any credit to get a student loan, and you have so many different options for deferment, refinance, etc, that they can be shown in good standing even if you haven't made a payment in years.

[kl030505]

Just an FYI, Student loans are of very little value on your credit report. The weight they are given in your FICO calculation is minimal and creditors don't view student loans as "real" credit. The reason being, it does not take any credit to get a student loan, and you have so many different options for deferment, refinance, etc, that they can be shown in good standing even if you haven't made a payment in years.

Interesting. So, in my situation, what would you recommend? I will still have the auto lease that we will reaffirm and we will be paying on that until March 2009. Should I go ahead with a secured card after discharge in order to start rebuilding right away? (using $300/month toward gas or something and pay off every month)? In the long run will waiting a year or so until I get a no annual fee offer hurt me too much?

[JollyGG]

Once you are discharged check out those offers that come in the mail. They may surprise you. We got all the lousy offers with high fee's but we also got several offers for no-fee unsecured cards. The interst rates weren't great, though admittedly much better than the universal defalt rates we were paying before BK. We choose the offers we liked best and have those card reporting OK every month.
We got Cap. One and WAMU but they aren't the only ones that will offer you a no-fee unsecured card.