Post discharge credit building question

[GUYINA13]

Hopefully I can start thinking about the post-discharge in a few months, so I was wondering about credit afterwards and what my credit score will look like and how the accounts that were included in the chapter 13 will show up on my credit report (like will it say closed and that I owe $0)

But my main question I would like those who have made it to discharge, to weigh in on, is if you have paid back most of your debt in the chapter 13, does that help your credit score. For instance, if your total debt was 59,000 and you have paid back 57,000 of that debt (secured and unsecured) does that help your credit score?

And on the same topic, if you paid back in full a car loan in your chapter 13, do you get any positive credit points on your credit, or because it was in a bankruptcy, does that reflect as negative?

[justbroke]

The amount of debt you pay in the Chapter 13 does not affect your post-Chapter 13 score. What matters is how things are reported and show on your credit report, plus the impact of the Chapter 13 itself being in the public record section of the credit bureau.

New trade lines, on time payment, types of credit, and keeping a low utilization are the only things that will help. The Chapter 13 will age and after 2 years, you could easily be in the 700s.

[GUYINA13]

The amount of debt you pay in the Chapter 13 does not affect your post-Chapter 13 score. What matters is how things are reported and show on your credit report, plus the impact of the Chapter 13 itself being in the public record section of the credit bureau.

New trade lines, on time payment, types of credit, and keeping a low utilization are the only things that will help. The Chapter 13 will age and after 2 years, you could easily be in the 700s.

Thanks for the reply,

I guess I am not understanding one thing. If you pay for a car loan (the full amount - not some crammed down version where you didn't have to pay the interest because of the bankruptcy) shouldn't that show up on your credit as you making your payments and paying that off?

I was led to believe that if you have a new car and you include it in your chapter 13, that you would not have to worry about the interest and extra fees, but my car loan amount pre-bankruptcy is precisely what I paid back in the chapter 13 interest and all. I didn't get any sort of break there.

So if you pay off a car, (even though it was included in the chapter 13) shouldn't you get a credit boost from that. It was paid off in the exact amount of time (actually a little early) that the original loan payment plan was set for pre-bankruptcy.

[shipo]

Sorry, it doesn't work that way; with a Chapter 13 on your record, even if every creditor, secured and unsecured alike, was paid in full, including interest and fees, your score wouldn't budge even a single point. Long story short, having a bankruptcy on one's record trumps pretty much everything else. With your discharge already in place, your scores will gradually improve up in the high 600 to low and middle 700 range, and if you have a pristine record for the next two years, once the Chapter 13 drops off your credit reports, you should be up in the 800 range across the board.

[GUYINA13]

Sorry, it doesn't work that way; with a Chapter 13 on your record, even if every creditor, secured and unsecured alike, was paid in full, including interest and fees, your score wouldn't budge even a single point. Long story short, having a bankruptcy on one's record trumps pretty much everything else. With your discharge already in place, your scores will gradually improve up in the high 600 to low and middle 700 range, and if you have a pristine record for the next two years, once the Chapter 13 drops off your credit reports, you should be up in the 800 range across the board.

Thanks for the reply. I was figuring that was going to be the answer. That sucks. Also, a chapter 13 almost seems worse than a chapter 7 as your bankruptcy basically ends right after the 341 in a chapter 7 and you can immediately start building back your credit. Because of being in a five year plan with a 13 where you have no activity whatsoever credit-wise - now all of your credit history/past has basically been erased and you are starting over like you are a teenager getting their first-ever credit card.

I guess I am not understanding this.

I just ran my credit report --- (I haven't been discharged yet, I am in the final two months of the 13) and I have no credit score at all because it says I have no history. (due to inactivity) in reality I have over 30 years of history built up and accounts.

So when I get the discharge, how am I even going to be able to get close to 600 if I am re-starting back at 0.

I doubt I will even be able to get a secured credit card let alone anything else - or am I missing something?

[justbroke]

I was able to get a secured card while I was in my Chapter 13 (right at the beginning). I also had a joint $25K credit card that didn't get closed and kept reporting as current. I also obtained 4 authorized user accounts. While I'm not shipo , my scores are all 740-760 just 2 years after my Chapter 13 closed (and no longer reports)... and climbing monthly.

[shipo]

Thanks for the reply. I was figuring that was going to be the answer. That sucks. Also, a chapter 13 almost seems worse than a chapter 7 as your bankruptcy basically ends right after the 341 in a chapter 7 and you can immediately start building back your credit. Because of being in a five year plan with a 13 where you have no activity whatsoever credit-wise - now all of your credit history/past has basically been erased and you are starting over like you are a teenager getting their first-ever credit card.

I guess I am not understanding this.

I just ran my credit report --- (I haven't been discharged yet, I am in the final two months of the 13) and I have no credit score at all because it says I have no history. (due to inactivity) in reality I have over 30 years of history built up and accounts.

I don't understand this, I had a credit score throughout my Chapter 13, and I was forced to stop using credit cards over a year and a half before I filed. Said another way, I went nearly 7 years without making a single credit card transaction.

So when I get the discharge, how am I even going to be able to get close to 600 if I am re-starting back at 0.

When I got my discharge my Vantage 3.0 credit scores (which are basically irrelevant) were all in the low 700s, however, my FICO scores (which are totally relevant) ranged from just above 600 to about 650.

I doubt I will even be able to get a secured credit card let alone anything else - or am I missing something?

You should have no problem getting a secured credit card. It varies by region, some Trustees allow you to get a secured card while in your bankruptcy, others, mine included, do not. After my discharge I didn't do my research properly and screwed up which cost me both time and lots of "Hard Pulls" against my credit reports. Even still, once my Chapter 13 fell off my reports this January, all 28 of my FICO scores shot up to over 800; what was interesting was a number of my scores had never reached 700 and then suddenly they were over 800.

As for rebuilding, I wrote the following up last year, hopefully it will help you out:

• https://www.bkforum.com/forum/after-...uilding-credit

[GUYINA13]

I don't understand this, I had a credit score throughout my Chapter 13, and I was forced to stop using credit cards over a year and a half before I filed. Said another way, I went nearly 7 years without making a single credit card transaction.


When I got my discharge my Vantage 3.0 credit scores (which are basically irrelevant) were all in the low 700s, however, my FICO scores (which are totally relevant) ranged from just above 600 to about 650.


You should have no problem getting a secured credit card. It varies by region, some Trustees allow you to get a secured card while in your bankruptcy, others, mine included, do not. After my discharge I didn't do my research properly and screwed up which cost me both time and lots of "Hard Pulls" against my credit reports. Even still, once my Chapter 13 fell off my reports this January, all 28 of my FICO scores shot up to over 800; what was interesting was a number of my scores had never reached 700 and then suddenly they were over 800.

As for rebuilding, I wrote the following up last year, hopefully it will help you out:

• https://www.bkforum.com/forum/after-...uilding-credit

Thanks for that link that is helpful.

I think I am just over-reacting as well as I went back and looked. So with experian, it says "Your annual credit report does not include a credit score, see your FICO scores and more by signing up for blah blah blah - So it sounds like I do have a score, but I have to pay to find that out.

All of my accounts show up on the credit reports (experian, equifax, transunion) but they all have a negative impact even though they say I owe 0 - they mention the chapter 13 -- So I assume they will update once I get discharged.

[flashoflight]

So when I get the discharge, how am I even going to be able to get close to 600 if I am re-starting back at 0.

I doubt I will even be able to get a secured credit card let alone anything else - or am I missing something?

I needed to refinance my 1st and 2nd mortgages for a myriad of reasons during the chapter 13. I did not know rates were going to rise so steeply and quickly in 2022, but I was always afraid of that occurring before I could refi. So I was on the clock in 2021 to get it done quick. I needed 641 or higher, but pricing gets much better the closer I can get to 680.

Just like a teenager, I needed to get secured cards, any unsecured cards that had no monthly or annual fees, and secured personal loans. I did not have any surviving cards. You do what you have to do. $500 is a good limit at the very beginning. You can find secured personal loans and secured cards that don't require good credit. I managed to complete the refi during the summer of 2021.

You will have an advantage at discharge over me since many banks won't give me anything due to the presence of a non-discharged bankruptcy on my credit report. I also burned most of the big banks. Pre-BK, I had credit lines $20k-$30k. Even today with a mortgage reporting on my credit report, I still struggle to get Apple Card / Goldman Sachs to give me anything more than a toy $500 limit while my highest Visa credit line is $4500 and my highest store credit line is $6500. I'm sure most or all of my current cards are bucketed so I probably can't get a $5000+ Visa without a security deposit until discharge. So when you get a $300 CLI like I did last week, celebrate it with a nice glass of wine!

[shipo]

I think I am just over-reacting as well as I went back and looked. So with experian, it says "Your annual credit report does not include a credit score, see your FICO scores and more by signing up for blah blah blah - So it sounds like I do have a score, but I have to pay to find that out.

I'd wait until a month or so after your discharge and then sign up for Credit.com's ExtraCredit service; the service is complimentary for the first month before you start getting charged, so basically, sign up, get your 28 (or now with the arrival of the six FICO 10 scores they probably report a total of 34) FICO scores for free, and then cancel the service.

All of my accounts show up on the credit reports (experian, equifax, transunion) but they all have a negative impact even though they say I owe 0 - they mention the chapter 13 -- So I assume they will update once I get discharged.

Regarding the impact of all of your old accounts, as I alluded to earlier, your bankruptcy trumps all; you could have 100 old negative accounts or none, it won't matter to your scores.

FWIW, during the two years between my discharge and the dropping of my Chapter 13 from my reports, there were any number of old accounts showing up, as time went on, the dropped off one-by-each until earlier this year when there was only one left, a car loan listed as IIB which was never late and which had been fully paid off since 2016. Once my bankruptcy fell off the loan reporting changed from IIB to "Current", showing a balance of something like $3,000; this in turn makes it look like I owe more than I do (my last report showed I owned $3,012 instead of the $12 I actually owe).

I disputed the old car loan a few weeks ago; it fell off of one of my three reports last week, I expect it will fall off the other two within a few more weeks.

[5yrplan]

I haven’t had a credit card or have a hoot about my credit rating since filing five years ago. I live debt free with piles of cash for emergencies or purchases. It’s awesome not having any payments. In 2023 I’ll also have a paid for home. Paychecks are great when this isn’t a payment to make. I spend, give and invest instead of making payments.

[shipo]

I haven’t had a credit card or have a hoot about my credit rating since filing five years ago. I live debt free with piles of cash for emergencies or purchases. It’s awesome not having any payments. In 2023 I’ll also have a paid for home. Paychecks are great when this isn’t a payment to make. I spend, give and invest instead of making payments.

And yet you are poorer than you would be if you used credit card; fact of life.

[5yrplan]

Yeah it shows all over this site how smart debt is lol. There must be creditors and bankrupt lawyers sponsoring this site. Enjoy blocking me and my post , epic failure.

[justbroke]

Yeah it shows all over this site how smart debt is lol. There must be creditors and bankrupt lawyers sponsoring this site. Enjoy blocking me and my post , epic failure.

Zero sponsors and no bankruptcy lawyers. In fact, other than the ads... no revenue either. Can't say that for any other site out there.

This site is just a resource for those that didn't use credit properly, or were beset by things outside their control. Loss of income, death, divorce, and other changes in circumstances. The simply fact is that most people can't buy a home without credit and some cannot even purchase a new car without credit. You may not even be able to rent a car or, in some cases, stay at certain hotels.

It's true, credit is not a toy. It should not be used for wants and we should even be careful using it for needs. My $1,600 in cash back (at 2%) and my $1,500 in bonus cash say that I'm making money on this. The house that I bought, on credit in 2020, was purchased at $320K. It just appraised at $482K.

So it's more a... to each their own. The problem is that most are not taught how to use and leverage credit. I do think that in the United States, we rely too heavily on credit whereas in other parts of the Western World, credit is still a factor, but not used as readily.

Finally, why would a moderator ban your or block your post 5yrplan for having a discussion? Your opinion is in the minority, but it is worth hearing. We all wish that life didn't require credit at all, but with rising prices especially in the rental market, home ownership can be a real saver for most. Not all, but some of the population may live a better life without credit.

[5yrplan]

Okay , you’re right debt is normal and most can’t handle it. Be weird be debt free instead. We all can do anything financially without consumer debt. Buying your primary residence means a mortgage for the majority of us and that’s the only debt tool one should use. 30 year mortgages aren’t good however they promote over spending, 15 year max. Those credit card points earnings are coming at the expense of someone that failed the credit card points game.

You all just try to think about getting your monthly salary (your largest wealth building tool) without a payment to make to any creditor, no that’s leveraging.

good luck to you all and thanks to this site