Are CC best way to rebuild credit??? Makes me nervous!

[basketsbears]

Hi,

We just filed. I know someday we will probably apply for credit, and the better the FICO score, better rates, etc. I really do not want a credit card. The only reason I can think of having one is to rent a car, as we haven't used CC's for 2-3 years.

Can our credit get better just by time and when I start paying my student loans back about one year after our BK (hopefully) will be discharged and closed. Do we have to have CC? We may or may not have auto loans that will report - haven't decided that one yet. We may find cheaper vehicles with or without loans after BK is over, but haven't decided that yet. Is it just easier to use a CC to build credit by having one, paying it off every month?

Sorry to be so dense, but CC have not been my friend, and I want this BK to truly be a fresh start, so even thinking of any unsecured credit like that makes me a little nervous.

Thanks!

Lynn

[justbroke]

A revolving credit card, bearing Mastercard/VISA/AMEX/DISCOVER branding, is only one component of how the credit scores are generated. Credit scoring loves to see longevity, on-time payments, car loan (installment loan), mortgage (installment loan), revolving credit cards (major credit card) to get a clean view of how you use different types of credit.

Having one or two major credit cards with a "high" credit limit is good for your credit profile. Without those types of cards, lender may not know how you handle revolving debt.

Now that I have written that... your credit should still be "good" by keeping your credit profile clean, no late payments, no collections, no public records, with your student (installment) loan. However, I wouldn't expect that you could get into the mid-700s or better. Please know that I don't know FICO and I can't tell you if you could even get into the 700s with no profile. (That is, not enough credit tradelines in order to generate a score.)

I like your approach in that you want to avoid credit if not necessary. I think having at least one major credit card is good to have for emergencies.

[LadyInTheRed]

I like your approach in that you want to avoid credit if not necessary. I think having at least one major credit card is good to have for emergencies.

I agree. But, if you are not 100% sure that you can have a credit card and not get into trouble again, don't get the card. Staying out of debt is more important than your credit rating. Maybe wait a while until good cash-only habits are firmly incorporated into your lifestyle.

[justbroke]

I agree with that as well LITR. For some, a credit card is a snake in their pocket. (To quote another Moderator.)

[IBroke]

Sorry to be so dense, but CC have not been my friend, and I want this BK to truly be a fresh start, so even thinking of any unsecured credit like that makes me a little nervous.

There is an option: How about a secured CC?