bk filers get the red carpet treatment

[schsa210]

not sure if this is the correct forum to post my general question but hopefully some posters can educate me on this.  this is a subject that i've always wondered about as well as some of my friends and coworkers.  why do credit card companies/banks give better treatment and sometimes higher starting limits to those with bankruptcy on their credit file compared to those with charge-offs on their reports that have been paid in full?  i had a charge-off with discover in the amount of $1,800, it was on my report for about 6 months until i paid it in full.  i felt i needed to since it was my account and all purchases were mine, but i was in a financial bind for a short period but took care of it as soon as i was able to.  this was back in 2014 and as of today, i still get denied due to my past relationship with them.  i'm not in major need of a discover card, but thought i would give it a shot to see what happens.  on the credit card approvals, i've seen where someone was approved for a sl over $15,000 after including discover in their bankruptcy.  just curious to why it's like that and to be able to provide some answers for others who are wondering the same.

[SBR249]

Have you ever tried reconning?

[Cherekas]

This is an awesome question as I have wondered myself about many posters here that have high SL after bankruptcy but I too had 2 chargeoffs (both now paid) that sank my scores tremendously but until I paid them I saw many posters here getting approved for lines a year or so out of BK as if nothing occurred. My chargeoff was with discover as well and BOA. I haven’t tried to get back in with Discover at all. But I’m curious as to why it appears that people that don’t pay their bills are given another fair and clear chance while people with chargeoffs are technically looked at as worse. Thanks for posing this question, I wondered about this so much as BK seems to be a way of life here??

[schsa210]

i haven't tried to recon, just thought i would wait it out a few years and see how it goes at that time.  i don't have a need for the card, just thought i would give it a shot and see what would happen for someone like myself with that past relationship with them.  even on the pre-qualifier (the updated one) my results keep saying "oops, something went wrong, please try again later" or something similar like that. 

[Anonymous]

BK filers are easy money for many years because you can't file a second BK until a certain number of years. So if they CO again you can sue then and get a judgment for many years.

Lenders don't always sue people because a BK may be a way to get out from judgments.

If you had a BK, it's way easier to get a judgment.

Most folks who file BK once have a high tendency to try to avoid a second one but they also tend to pay a LOT more interest. There are some amazing research points on BK filers and a future lifetime of debt.

Basically it's worth the risk. Folks who CO may CO again but they are also free to file BK right away.

[Anonymous]

Having a BK is far from glamorous. We work like crazy for the good approvals and have to do tons of research to find institutions from a very small pool of banks that will work with us.

I work in an industry that runs credit checks. If I switch jobs, I have to explain why I have a BK on my record to a prospective employer. 

When I inquire about an apartment, the replies stop coming when I mention that I have a BK but have taken my rebuild seriously and have near 700 scores.

If I want to switch car insurance, I have to ask for a reconsideration of the premium hike due to the reporting BK.

The people with good credit after BK have done a lot of work to get there. You can do the work and get there as well.

[Anonymous]

I would say that Steeler & ABCD have made good points above, but I definitely understand where it just feels wrong to have worked so hard to save up the money to pay a charge-off and still get burned when you try to move forward with the institution. I would be upset too. Steeler mentions all the work they put into rebuilding after bk: you put just as much work into fixing that CO.

My thought, though, is that the feelings about this should be directed not at BK'ers who had various reasons for filing/discharge and the various rebuilds they may have put together, but at the businesses who are not giving you a chance. Perhaps the business has an understandable reason, but it still sucks on the user end.

[Anonymous]

One big thing to note is that there are people with 760 FICO8 scores with a chargeoff or tax lien or other negative -- and they tend to get approved for everything they aim for within reason.

The thing to note is that they've also spent years rebuilding and getting their credit profile "thick" and well aged.  So it isn't a denial forever, even with the chargeoff reporting.  You just have to be patient and don't waste inquiries or accounts on useless cards.

I've been rebuilding since March 2017 (lower than 550 FICO scores for sure) and had chargeoffs and collections and late payments and everything imaginable.  I didn't even have a credit card that I could use.  So I patiently started the rebuild, made a ton of notes, set up a filing system, and spent hours searching the internet for the best steps to take.

9 months later I'm in the 700s, in with all the lenders I wanted to be in with, and should see 800 scores in 2 years!  But...it took a TON of time, and patience.  I purposefully skipped apping for low quality cards and put my energy into just patiently attacking my derogatories and patiently waiting for approvals from better lenders.

It will come, but it won't come overnight, and it won't happen without a lot of work.  Most of us here have put in hundreds of hours of rebuilding time.  Some more.  I've spent hundreds of dollars on USPS postage during my rebuild.

Also note rule #10 of credit seeking: the more you need a credit card, the more likely you will be denied.  The less you need a credit card, the more likely you will be to get your mailbox full of postcard offers.

So if you feel you "need" a credit card, make sure you're not in a bad situation where you want to rely on credit.  Back off from "need" and start a long term list of wants, and WHY you want them.  Then review that list monthly and see if you STILL want it.

I have 3 cards I really wanted after my rebuild, got them sooner than I would imagine, and now I have useless cards sitting in the sock drawer.  Wish I never got them during my rebuild!

[schsa210]

thanks everyone for your input, i appreciate the replies.  i have plenty of credit cards at the moment, in the garden waiting for all inquiries to drop-off (9 to 11) on each report.  the time i did apply for discover and was denied, the nice thing is that i received a letter letting me know they did not do a hard pull.  this is just something that i've been wondering about but never really knew the answer to it. i'm a patient person, i know improving credit reports takes time. 

[pizza1]

The red carpet treatment huh?? Well, Let me chime in here.

Its not whats is cracked up to be. People who file Bk have that blemish on their reports for 10yrs, and that embarrassment for 10yrs anytime/anyone looks at their reports for anything, and immediately judges you.

I had 4 apartments turn me down solely for that, even though I had no debt, and met their income requirements by a handful, and had personal reference letters, amongst other things. Denied, denied, denied. Eventually found a place that didn't care and was glad to take my money. Someone is always glad to take your money out there

I couldn't buy a home for 2-4 yrs post BK due to federal laws on BK and home buying.

My car insurance rates skyrocketed due to the PR reporting, and my insurance (USAA) refused to let me even open a savings act with them for 5 yrs due to the BK, and I can't even have any credit products with them till 7 yrs or after.

If I change jobs, and they run a background check on me with the state, they will see it, and of course I could be denied that job, and questioned about it.

My first car loan out of BK was 18% because that all I could get because of the BK reporting. I eventually talked (reconned like hell) my CU into refinancing it from them since I wasn't upside down on the loan, and had equity already, and I had to write a letter of explanation of the BK.

Folks who file BK can't get in with major lenders for many years (min 5-7yrs) like Chase, Citi, and AMEX, and have to resort to predatory lenders like Creditone, FP, etc..who charge monthly fees just to have their card and a $300 CL for a few years to rebuild and get positive info on their reports.


See where Im going with this????? So, before a blanket statement of BK'ers get the royal red carpet treatment is made, know their stories. All you have to do is go to the BK section here on the forums, and see their stories, and most are having troubles getting approved for anything.

There are always exceptions to the rule. Im definitely one of them. Im extremely aggressive, and I was completely rebuilt credit wise within one year post DC, the word NO really wasn't in my vocabulary, but I also worked my butt off, researched like crazy, and knew the ins/outs of credit, who to go to etc...

But, I also had a very thick profile before BK with credit cards showing back to 1998, and loans back to 2005. I was already established with a long credit history as well.

The reason BK'ers get approved so easily sometimes for certain cards is because lenders know that once you file a certain BK, you can't file again for a certain number of years, in my case BK7...8yrs. So, lenders will sometimes give you the credit knowing if you default they can get judgment and garnishment so fast on you and get their money.

Food for thought...