Am I being naive?

[discombob1]

I started my credit report cleanup the day after discharge. There were some CA accounts reporting open and they were corrected quickly. I did dispute a bunch of OC accounts that were charged off. Some have changed to IIB, but others validated. Technically, they were charged off before I filed. All of the debts were a few years old by the time I filed and had been sold to CA's. I did list the OC's in my petition to be safe.

Anyway... there are still some derogs on the reports prior to discharge. Is it really worth the time and effort to keep fighting? My FICO is at 660 now and I can only expect it to go up over time. I accepted one Cap 1 card with no annual fee, 500 CL. I plan to pay my cell phone bill with it each month, then pay the CC bill off each month. I also have a few zero balance retail cards that survived so that is helping my available credit. I have my student loan which has been paid on time and will take me quite awhile to pay off, so I have an installment loan on my credit which will help.

I guess I just feel like this is enough. I have a car which is in good shape. I rent and don't want to consider buying a house for at least five years. I've been living on a cash basis for years now anyway and like it (my debit card does almost everything I need). So I guess I feel done. I will continue to monitor my credit reports for accuracy, but I feel like time should be enough to increase my score. I really don't want new credit. Is the increase in score worth 1) the extra work of fighting the OC's on reporting and 2) getting more tradelines I don't really need or want? Any opinions on how others have done it are welcome.

[bkdone]

I'd say, "Yes and No." Keep disputing and getting everything that shouldnt be there off your reports. This will help improve your credit. As for opening more trade lines...that is debatable. I dont think you should open credit and take on debt that you really dont need or possibly get you into trouble again. Use your retail cards but only charge small purchases ($5-$10) and pay them off (show activity.) Some cards will close you out for non-activity, and that will lower your score; transversely, by using them and demonstrating good habits, the companies will increase your open to buy- which is also favorable since your utilization percentage goes down. By giving up now, the bad things will just continue to linger and yes their weight on your credit will diminish over time, but you just were discharged...so you have a long time to wait. By putting yourself in the best possible "financial light" so to speak, you may be able to raise your scores and shore up your credit overall, just in case you need to apply for credit in an emergency. What if your car is totalled and you need to buy a new car next year?? What if you have to move?? The unexpected happens and we all will need credit at some point. I say do what you can...

[HHM]

I suppose it depends on what is still a problem. Note the pre-BK charge offs are valid entries. If the lingering derogs are old stuff, then their impact on your credit is minimal at this point anyway.

I sort of align my self with the Dave Ramsey view of credit, no credit is good credit. It is generally a waste of time and effort, and money (for those monitoring services) to try to actively manage your credit. Cash is king, people with money don't need credit and the life events where you might need credit are so few, that if you have cash, you will get prime lending even if you are a credit ghost (meaning, you never use credit again). In some of the hardest hit real estate markets, a person who can save $1000 per month and invest it reasonably wisely could pay cash for their next property in as little as 5 years, or easily put 50%, if you have 50% down, do you really think they aren't going to lend to you?

But to your point, if you are already getting credit offers and so forth, your credit is fine.

The goal is 3 trade lines, but they should be quality trade lines. So, don't get a bunch of sub prime credit cards, wait and get quality.

[discombob1]

All the derogs are pre-discharge, which is why it's hard for me to get worked up about them. I have put a ton of effort into savings, and now have a decent emergency fund and cash saved toward my next car. I too like the Dave Ramsey school of thought. The only reason I got one CC is because there are some narrow circumstances where a debit card isn't enough.

I wish I was as brave as Dave Ramsey to go with no credit history period, but I'm pragmatic. I have student loans that will take several years, and I have one general card and a few retail cards. Is that enough for the 3 you mention HHM, or should I wait and reassess when I qualify for better cards? Frankly, I'm fine with my one little Mastercard. Of course I say that now, but I do want to improve my credit long-term.

[HHM]

okay, credit score maximization...I post this with a word of caution, the best credit scores require a person to be in debt, so please realize that your best tool to getting what you want is money, not credit.

There are a few schools of thought on this issue, the main dispute is over credit history. Realize that BK tanks your credit history unless you are lucky enough to have a few cards survive the BK. I take the l-o-n-g view which is why I recommend only getting 1 sub prime credit card after BK to establish credit "usage" (not history). Note, some recommend going out and getting 3 crappy CC's right out of BK. I disagree because the low limits, over the long run, hurt more than they help and you will start getting regular, prime, CC offers with 12-18 months.

So, post BK credit profile
1. 3 credit cards (1 subprime, and 2 prime), available credit around $10,000-$15,000 (it will probably take you about 18 months to get to this point)
2. Clean up credit report, but no need to be overly anal about it. Clean up that which is actually inaccurate.
3. Time, most peoples credit will recover after BK within 24-36 months.
4. If you have student loans, they should be in repayment, not deferment or forbearance (unless you are IN school)

I don't think anyone can see an 800+ credit score after BK (maybe after 20 years), but realize, that anything above 740 really doesn't matter.
But those with 800+ credit scores tend to have a 30 year + credit history, multiple car loans over the course of that time, $50K+ available credit with under 20% utilization, and mortgage debt, no late payments ever. Basically, people who are way over leveraged.

[discombob1]

okay, credit score maximization...I post this with a word of caution, the best credit scores require a person to be in debt, so please realize that your best tool to getting what you want is money, not credit.

That sentence alone helps give me the clarity I need. Since I don't ever want to have debt again with possible exception of a small mortgage that may be what caps my score.

Thanks!!

[Amy26]

Very good advice here however I don't really agree that you have to have debt to have good credit. And not all debt is bad debt. The people that have really high credit scores have tons of available credit but generally will not have much debt at all. At least not unsecured debt. Most of these people will focus on one credit card per month... they will charge all their regular "cash" expenses to the card and then pay it off in the same month and then rince and repeat on another credit card the next month. To me, you are not going into debt by charging a bunch of stuff in one month and then paying it off. Also, installment loans don't really build the credit quite like managing credit cards does. It of course has its place...but the cards are the meat of it.

Personally, I would never really want my credit to be up in those super high ranges because, since you are lumped in with pristine people, you will be penalized for the smallest little things on your report. Credit scoring is measured by buckets and lumping people into categories... for example a person with an average age of accounts of 2 years may have a higher score then another person with a similar credit profile who has an average age of accounts at 6+ years. This is because on average, people with lower average age of account metrics have poorer credit. So, they are comparing you to the other people that are in your "bucket". There are tons of various metrics that they use and all the models are different but you get the gist.

Just last month... my average age of account metric went from 5 years 4 months to 5 years 5 months. I saw a 10 point decrease in my score. Absolutely nothing changed on my report except that metric. So, even though I achieved a better metric... my score went down because compared to the other people in my new bucket... I apparently sucked. I then had a new account hit my report this month and my metric went down again to 5 years 4 months. I got those 10 points I lost back when I was back in the lower bucket.

There are tons of people that are credit nazis and I'm sure if you did enough research you could actually have your pre BK things removed. I am also to the point where I'm just like... you know what, I did enough. I recently followed some advice to try and actually get my BK and the IIB accounts removed from my credit report. I was able to remove some of my accounts but honestly, its not really worth my time to keep trying. There are some people that can send letter after letter hounding creditors and the credit agencies but I just don't have the will to do it. I cleaned up my report as best I could and I have plenty of credit now. My scores are decent enough to get any kind of car loan I might want and maybe down the road I can get another mortgage after my foreclosure period is gone.

So, its really up to you on how much you want to fight. I still have a bunch of accounts on my equifax report that are showing as "delinquent" from the bankruptcy but they really aren't. But who cares.... last time I got denied for "too man delinquent accounts", I sent a reconsideration letter telling them that the accounts were really not delinquent and were IIB etc and they agreed with me and gave me what I wanted. So, you know... for me, it's enough... and I don't think you're naive for thinking that way as well. My scores are close to 700 and I'm only 1.5 years out from my BK... so, I think I'm just fine.

[discombob1]

Amy, thanks for responding. All of these responses have helped me clarify my goals. I'd like to believe I will never need or want credit again but that IS naive. However... what is enough? For someone else, they may feel that having a pristine report is their goal. For me, the BK is true, the charge-offs are true... as long as everything else is accurate, I am satisfied. I am willing to take time and be responsible with what credit I do have. And because I don't want the hassle of using more than one card, it sounds like I will have a lower score than someone who will. And I think I'm ok with that. My financial goals may change, but for now this forum has helped me clarify my current needs. Thanks forum!!