When/How to start rebuilding credit?

[Tberry]

Hi! My husband and I have filed for BK. Our discharge will go through in March, the 21st. When should we start looking at rebuilding our credit? Should I wait until after the discharge to apply for a secured CC? Thanks so much for any advice!!

[HRx]

Hi,

I always tell people that filed BK to wait a minimum of one year to applying for new lines of secured/unsecured credit. Society has made low and middle income people so dependent on credit that.........re-establishing credit is the first thing a family/person wants to do after they had all thier debts (credit card) discharged under BK! If a person wishes to live a propersous finanicial life after BK, they need to take the time to change how they view debt, money, and credit; this is critical!!!! Hence, living life on a cash only basis for a year more can truly play an integral role in augmenting ones' concept of debt, money, and credit.

During this one year + timeframe, you should be saving/investing as much money as possible! Again, the majority of individuals that files for BK don't have any liquid monies at there disposal. I gaurantee that, the feeling of having $3,000, $5,000 or $10,000 of liquid monies in the bank will be a more satisifying feeling, than it is to be "re-establishing" your credit!

But to answer your question, you can apply for new credit the moment your BK is discharged. But keep in mind that, time will work in your favor too. You'll be recieving secured credit card offers left and right without even having to apply for it. Within a year or two of your BK getting discharge.

Just some food for thought!

Good Luck!

[Tberry]

Todd,
Thank you for your answer. We were in credit counseling for three years prior to this, so living without a CC has become old hat, but we were told that you need to start est. credit as soon as possible after discharge. We do have a small savings now, almost $3000, thanks to the BK and reaffirming some of our higher interest rates. I also graduated in Dec, so that has helped too. After a year of not working, I have a garanteed job and contract for next school year. The BK has taken so many worries off of our shoulders, it will feel great when that discharge comes through next week. This site is a wonderful thing, and I am glad I found it. Thanks for your help!!!

[robivi3]

Todd,
Your statement here will be "passed over" lightly by most people. I am referring to the "liquid" issue.

Wisdom is often passed over lightly as we pursue what we deem more important.

You have made the wisest and simplest statement ever made in this forum. it is the purest common sense, but most of us overlooked it. It is now emblazoned in my mind. Thank you a thousand times over...

When you deal with car repairs, emergencies, etc... Good saving habits are indespensable.

[EdytaHome]

Now that I don't have a credit card to my name for the first time in my adult life I feel more in control of my money. Honesty, I made alot of money while I had my great job but I never knew were it went. It was a shuffle from one credit card to the other, of course always having what I wanted...
A simple observation, since I have been buying my gorceries with paper money, I actually buy less and really think about what I'm buying. My husband opened up a new bank account before the BK and he has a visa check card but I don't want one! After I return to work in a year or two (I'm taking time off with my little one) I will than start thinking about credit cards. I have my student loans to help me rebuild my credit for now.

[robivi3]

EdytaHome, A......absolutely....men!!!!!!! Casah in the Bank is a grand feeling!!!!!!!!!!!!!!!!!

[vic6string]

re-build does not mean re-establish old ways

I am in the camp that says you should start as soon as possible rebuilding your credit, but that does not mean you should jump on the first pre-approved card offer you get, and the cards you do get should see limited use. It has been less than 2 years since our (my wife and I) discharge, and we already have 3 platinum cards (unsecured) between us and recently bought a new car at just under 6% interest. We also refinanced our home at 7% (just a smidgen over our original mortgage) to take out some cash (about 15,000) for some needs and to put some cash in a savings account. The trick is to be picky at first, and be smart later. We were offered tons of cards from the big sub-prime guys (Capitol One, Orchard, Providian, etc) We didn't take a secured card...passed on the classic cards...just ignored the mail until we were offered a Capitol One Platinum (platinum in name only, no real benefits and only a 2 grand limit) with no annual fee. You will notice the same banks will keep sending you offers, each better than the last (assuming you have behaved and paid stuff on time). Just wait til you get the one you like. Then apply to only that 1 card. You want to keep credit inquiries to a minimum. Once you get the card (and you will get it at some level) use it. But not like you used the other cards that got you in trouble. I put my Netflix and DirecTV on my card as autopayments. I know I will pay them anyway, so I put them on the card and pay the card off in full every month. No purchases...don't even take the card out with you, leave it locked up at home. If need be, cut it up, but just keep paying some bills with it that you would pay anyway and pay the bill in full every month. You will be surprised how fast better credit offers will come in. Ignore those too for a while til the good ones come in and get maybe one more card. Do the same with it. Live cash, but build credit. Perfect harmony.

[Broderick]

Good Advice

great advice

Hi,

I always tell people that filed BK to wait a minimum of one year to applying for new lines of secured/unsecured credit. Society has made low and middle income people so dependent on credit that.........re-establishing credit is the first thing a family/person wants to do after they had all thier debts (credit card) discharged under BK! If a person wishes to live a propersous finanicial life after BK, they need to take the time to change how they view debt, money, and credit; this is critical!!!! Hence, living life on a cash only basis for a year more can truly play an integral role in augmenting ones' concept of debt, money, and credit.

During this one year + timeframe, you should be saving/investing as much money as possible! Again, the majority of individuals that files for BK don't have any liquid monies at there disposal. I gaurantee that, the feeling of having $3,000, $5,000 or $10,000 of liquid monies in the bank will be a more satisifying feeling, than it is to be "re-establishing" your credit!

But to answer your question, you can apply for new credit the moment your BK is discharged. But keep in mind that, time will work in your favor too. You'll be recieving secured credit card offers left and right without even having to apply for it. Within a year or two of your BK getting discharge.

Just some food for thought!

Good Luck!

[Broderick]

great Advice

SOunds like u got it down man good luck


QUOTE=vic6string]I am in the camp that says you should start as soon as possible rebuilding your credit, but that does not mean you should jump on the first pre-approved card offer you get, and the cards you do get should see limited use. It has been less than 2 years since our (my wife and I) discharge, and we already have 3 platinum cards (unsecured) between us and recently bought a new car at just under 6% interest. We also refinanced our home at 7% (just a smidgen over our original mortgage) to take out some cash (about 15,000) for some needs and to put some cash in a savings account. The trick is to be picky at first, and be smart later. We were offered tons of cards from the big sub-prime guys (Capitol One, Orchard, Providian, etc) We didn't take a secured card...passed on the classic cards...just ignored the mail until we were offered a Capitol One Platinum (platinum in name only, no real benefits and only a 2 grand limit) with no annual fee. You will notice the same banks will keep sending you offers, each better than the last (assuming you have behaved and paid stuff on time). Just wait til you get the one you like. Then apply to only that 1 card. You want to keep credit inquiries to a minimum. Once you get the card (and you will get it at some level) use it. But not like you used the other cards that got you in trouble. I put my Netflix and DirecTV on my card as autopayments. I know I will pay them anyway, so I put them on the card and pay the card off in full every month. No purchases...don't even take the card out with you, leave it locked up at home. If need be, cut it up, but just keep paying some bills with it that you would pay anyway and pay the bill in full every month. You will be surprised how fast better credit offers will come in. Ignore those too for a while til the good ones come in and get maybe one more card. Do the same with it. Live cash, but build credit. Perfect harmony.[/QUOTE]

[moneyfolk]

Credit Rebuilding

The credit card offers will follow in time. Remember to practice the following:

• Always pay your bills on time
• Don't apply for too many lines of credit
• Don't max out your credit cards
• Hold on to credit cards with which you have a strong credit history

Here is an article on how your FICO score is determined.

[jeffstrikesback]

Fingerhut

Anyone try getting credit with Fingerhut? Looks like they have a HUGE selection of items to get and offer payments. Also, PLEASE tell me if i should wait till after my discharge before i apply for anything - discharge in two weeks. Thanks.

[bkfiler]

i guess i wouldnt use anything from fingerhut. you will get plenty of offers elsewhere.

the longer you wait till after your discharge the better. but i havnt seen anything that say you cant apply before it.

you can get orchard card really easy it seems to help build your credit. $39-59 annual fee. 15% APR and no monthly fee.

[bilbo]

Jeff, I was just approved for the Orchard $39/year 14.9% unsecured with a $300 limit. I am not discharged yet. I did wait to apply till after my 341. So I suppose as long as the US Trustee doesn't come along and want to convert meto a 13 I'm OK.

Orchard will do a soft pull first to tell you which cards you are most likely to be approved for. Then you can apply for whatever card they recommend--and that will be a hard pull.

I agree that people need to change they way they view credit(Not all of us filed BK due to credit card debt)--but the fact is, that credit is very much a requirement in this society. Not having a good credit rating can affect the ability to get bank accounts, utilities, and even determine what rate you may get on your insurance. I think rebuilding POSITIVE credit is one of the most important things we can do after BK. Build credit but don't go back into debt. Charge something small you have to pay every month(even just 1 tank of gas) and pay it off in full every month.

I wanted to go ahead and start getting a positive account on my CRA's. I will probably wait a while before getting any other ones. I was happy with this as I thought I would have to go secured at first. I wonder why some people seem to get some really good offers soon after BK and others 6 months down the road are still barely getting a secured card.....Anyone have any thoughts on this?

I can't agree more about the savings-Before I filed for BK even a $400 car repair seemed like a catastrophe and was a great source of stress. I started havinga portion of my pay go directly to a savings account--and NO ATM access. That is my way of making it a little less tempting to use that money for other things.

[nessa30]

I have student loans to establish credit...

I just wanted to know if i'm doing the right thing with my credit. my chapter 7 discharged 2-22-06 and i just finish my medical billing and coding course. So you know I have student loans. They are with sallie mae and are deferred until october of this year. Now I know student loans are basically an installment loan that will be reprted every month on my credit report and I can establish my credit that way too. but i just wanted to know should i apply for one of the credit cards(Orchard bank-Aspire Visa)? or do i just establish my credit with my student loans. Plus i plan on going back to school for nursing soon. Can someone let me know what to do?

email address also: [email protected]

[Roadrunner]

If you want to build credit, then student loans alone may not be enough. From everything I have read, installment loans are not nearly as important as revolving accounts. If you want to build, then opening a credit card or 2 would help.

I'd say to avoid Aspire & their fees, and try Orchard or a secured card.