Rebuilding credit?

[becky20]

So how are you supposed to rebuild your credit while in a 13 if you can't even get a $200 credit card? Our car loans are paid in the plan and were crammed so not even sure that the payments will help our credit. So are we SOL until we get done with our 13 or should we request for permission to incur debt to get a SMALL LIMIT credit card with the only purpose being to rebuild credit? We need to be able to get our credit in as good of shape as possible to qualify to buy a home as soon as we possibly can after discharge. We have 2+ more years but I know it can take quite awhile to rebuild credit so I want to start as early as I can...

Interestingly on freecreditreport.com our credit scores were both about 640 but then I heard that's not a true fico score and have on idea if that's anything close to what our true experian credit score is...

[needanswers]

We were told that we can't even get a secured credit card without the Trustee's approval so that's out. (we were hoping to be allowed one to make renting cars easier)

[carlsbadmike]

Credit After Bankruptcy

You could apply where i did at www.firstpremier.com. Be prepared for 60% interest rate if you don't pay the card off each month. Also, there's a $25 application fee and a $75 yearly fee charged up front. I'm not sure if you can get one before your bankruptcy is finalized. I waited until mine was and got this credit card 6 weeks after my chapter 7 was finalized. Good luck. This was the only one that I could get to go through.

[jcj112562]

Edit: Boy, that was a dumb reply I wrote...pay no attention to the idiot behind the curtain.

[becky20]

You could apply where i did at www.firstpremier.com. Be prepared for 60% interest rate if you don't pay the card off each month. Also, there's a $25 application fee and a $75 yearly fee charged up front. I'm not sure if you can get one before your bankruptcy is finalized. I waited until mine was and got this credit card 6 weeks after my chapter 7 was finalized. Good luck. This was the only one that I could get to go through.

With a 13, depending on trustee rules, you often (in my case anyway) need trustee approval to incur ANY debt. So not like we could just simply apply and get a credit card...

[walkthaplank]

Your credit will creep up as you get farther and farther away from your filing date as you go in a CH13. I am a year into my plan and my credit score from filing date has gone up from 518 to 626. Be patient, you won't need it for a while

[Flamingo]

To the OP - you really can't rebuild your credit while in a Chapter 13...getting credit or a credit card while in an active plan is usually not possible. It's hard to be in a Chapter 13 after having the luxury of credit and a card on hand for instant purchases but that all goes away during your Plan years and you have to change your lifestyle and learn to budget and live on cash only. It's hard, I know. But it's the best budget teacher in the world. You will have to learn to live on cash for a while and as time goes on (time is your friend after filing bankrupty) and you make all Plan payments on time, mortgage payments, utilities, etc. with nothing late, get your discharge and continue to be prudent witih payments, the time will come when you will get approved for a card. If you don't go overboard thereafter, you will be fine.

If you absolutely have to apply for credit during your Plan, check first with your attorney as one is usually not allowed to apply for credit during a Chapter 13 without Trustee permission.

[becky20]

Yes, it's not that I NEED or WANT to be using a credit card, I just feel like it's going to be tough to get qualified for a mortgage out of a bankruptcy if I haven't done as much as I can for rebuilding our credit.

I was surprised however, that when I pulled my credit score yesterday that it was my one score was 656! But, I think that having filed 2+ years ago was big in boosting our score. I hadn't pulled before now so I have no idea just how low my scores got but I'd imagine it was pretty darn bad!!!

[NowImDownInIt]

Your credit is going to creep up either way with "no new credit." When you are out from your bankruptcy you will qualify for an FHA insured loan so long as you have a 640 credit score, and you should after the given amount of time. Their requirements are that you are 1 year from your filing date in a chapter 13, so supposing you have a 640 credit score you can technically get the loan in BK with your trustee's approval. Don't worry over getting a credit card right now.. Take this time to heal more than anything.

[becky20]

Thanks, I actually just checked one of my credit scores and it was just about 660. I guess i just worry that if FHA increases the required scores or if my other two reports are lower, I just want to be safe. I was shocked to see my score was already that high, since I wouldn't be surprised if right after filing it dropped to the 400's with all my lates!!!

Thanks!

[Flamingo]

Your credit is going to creep up either way with "no new credit." When you are out from your bankruptcy you will qualify for an FHA insured loan so long as you have a 640 credit score, and you should after the given amount of time. Their requirements are that you are 1 year from your filing date in a chapter 13, so supposing you have a 640 credit score you can technically get the loan in BK with your trustee's approval. Don't worry over getting a credit card right now.. Take this time to heal more than anything.

Also note a major requirement is that you cannot be late with any of your Plan payments during your Chapter 13. They will contact the Trustee to verify that all payments were made and made on time. Also be prepared, if approved for a FHA mortgage after your 13, to still be considered a high credit risk as you will have included for the first five years of payments PMI which can increase your payments dramatically. That PMI is required and has nothing to do with how much equity may be in the home or how large a down payment you put down to try to avoid it.

[NowImDownInIt]

That PMI is required and has nothing to do with how much equity may be in the home or how large a down payment you put down to try to avoid it.

I didn't know this. Dang. I was hoping to avoid PMI this time around with a good sized down payment. Does this change after a certain amount of time post discharge?

[rjd78]

Your credit is going to creep up either way with "no new credit." When you are out from your bankruptcy you will qualify for an FHA insured loan so long as you have a 640 credit score, and you should after the given amount of time. Their requirements are that you are 1 year from your filing date in a chapter 13, so supposing you have a 640 credit score you can technically get the loan in BK with your trustee's approval. Don't worry over getting a credit card right now.. Take this time to heal more than anything.

Edit: I'm a dumbass. I didn't read your post correctly. Sorry. However, the credit score only needs to be 620.

The only requirements are:

(1) Middle credit score of 620or better (this means of your TransUnion, Experian, and Equifax scores, they take the middle FICO score)
(2) On time with all trustee payments
(3) Letter of approval from the trustee to incur new debt
(4) Must be at least 1 year into your plan

As far as rebuilding your credit, I used a company called Lexington Law. They basically just challenge every single negative thing on your credit report. They do this over and over again until the credit bureaus basically buckle and remove the items. I needed my TransUnion score to go up from 608 to (at least) 620. In 4 months time, they got some things removed and it went up to 636.

Thus, I got pre-approved just yesterday for a home loan. Now, I'm just waiting on the trustee's approval to proceed.