Rebuilding Credit

[jammy]

I just filed Chapter 7 and my bankruptcy was final on September 20, 2003. I had virtually nothing so it was a cut and dry case. I'm starting over. It was all credit card debt.

I read an ebook on how to rebuild credit by taking out small loans and paying them off. I'm thinking of doing that.

The only thing I have to my name worth any value is my monthy paycheck, which isn't much. I pay my bills with money orders.

I know these credit cards can get you in trouble, I'm living proof. However, I was curious if applying for one card would be a good or bad idea.

I do not want to go under again. However, what really put me in over my head was I got laid off and was paying my bills via credit cards because I couldn't find a job and unemployment just wasn't cutting it. This is not to say I was not in debt prior, I just was able to handle it better with a steady job. ;)

[HRx]

I just filed Chapter 7 and my bankruptcy was final on September 20, 2003. I had virtually nothing so it was a cut and dry case. I'm starting over. It was all credit card debt.

I read an ebook on how to rebuild credit by taking out small loans and paying them off. I'm thinking of doing that.

The only thing I have to my name worth any value is my monthy paycheck, which isn't much. I pay my bills with money orders.

I know these credit cards can get you in trouble, I'm living proof. However, I was curious if applying for one card would be a good or bad idea.

I do not want to go under again. However, what really put me in over my head was I got laid off and was paying my bills via credit cards because I couldn't find a job and unemployment just wasn't cutting it. This is not to say I was not in debt prior, I just was able to handle it better with a steady job. ;)

Depending upoon your current fico/beacon score you may qualify for a secured credit card with a initial credit limit of $250 -$350. If you fico/beacon score is to low, wait about six months and apply for a secured credit card that reports your payment history to all three CRAs, and one that doesn't list your account with them as a secured credit card.

You may also recieve "Pre-Approval" letters from several different secured credit card companies. I suggest researching each company prior to apply for credit with them. Be weary of the steep annual/monthly fees a lot of the companies charge too.

Good Luck

[rainmand]

It's really important to re-establish your credit if you're considering purchasing a home in the future. Lender's like to see you've been making regular monthly payments since a BK because it gives them confidence you know how to handle money prudently.

I suggest starting by obtaining two secured credit cards for low amounts (approximately $300-$500) and making regular monthly payments. After 12 months of making regular payments, ask the credit card company if you can convert to a non-secured card and increase the limit. Then after 6 more months of regular payments, ask for another limit increase.

After my bankruptcy concluded, Capital One offered me a secured Master Card credit card. I paid them $99.00 and they provided me with a secured card with a $1,000.00 limit. After 12 months of regular on time payments, they converted it to a non-secured card, increased the limit to $1,500.00 and gave me my $99.00 back, with interest. Then, about 6 months later, they offered me a non-secured Visa credit card. Those are the only two credit cards I pocess and I use them for the sole purpose of credit re-establishment.

I'm working with a borrower right now and her chapter 7 is 3 years old. For the last 3 years she has been paying all her debt with cash and living with her parents since the BK. Her credit report doesn't have any dings for 3 years but it also doesn't show any re-established credit, and the Lender's don't like that.

I can get her a loan but not the one she wants. She found a condo she really wants and can't afford a down payment and needs a 100% loan. It would have been easy to get the loan for her if she aquired two credit cards 2 years ago and had a good payment history.