topic Re: credit cards post bankruptcy in Credit Cards

credit cards post bankruptcy

Anonymous — Wed, 09 May 2012 17:13:41 GMT

I am trying to rebuild my credit. My chapter 13 discharged 02/12. I have read here that the best way is to get a credit card and to keep the balance below 9% of the cl. I thought I also read that you need to make sure to get a card that reports to each credit agency. How do I know which cards report to who?

Re: credit cards post bankruptcy

Creditaddict — Wed, 09 May 2012 17:57:55 GMT

@Anonymous wrote:
I am trying to rebuild my credit. My chapter 13 discharged 02/12. I have read here that the best way is to get a credit card and to keep the balance below 9% of the cl. I thought I also read that you need to make sure to get a card that reports to each credit agency. How do I know which cards report to who?

1. Did you keep anything through the BK, car, house?

2. Have you pulled EQ or TU here on MyFico?

3. What banks were included in your BK?

Yes Util is important during rebuilding.

I think you would be pretty hard pressed to get a credit account that doesn't report to all 3 credit reports unless talking about Bill Me Later but they are not all that BK friendly at least in beginning.

Re: credit cards post bankruptcy

SoulMaster — Wed, 09 May 2012 18:03:22 GMT

@Anonymous wrote:
I am trying to rebuild my credit. My chapter 13 discharged 02/12. I have read here that the best way is to get a credit card and to keep the balance below 9% of the cl. I thought I also read that you need to make sure to get a card that reports to each credit agency. How do I know which cards report to who?

See my post here: http://ficoforums.myfico.com/t5/Bankruptcy/How-to-rebuild-your-score-after-a-ch7-BK/td-p/1384075

I know you filed a 13, but the method I wrote is basically the same (except that you should get a secured card while in the ch13 plan, and maybe a small auto loan).

-SM

Re: credit cards post bankruptcy

Creditaddict — Wed, 09 May 2012 18:28:45 GMT

@SoulMaster wrote:
@Anonymous wrote:
I am trying to rebuild my credit. My chapter 13 discharged 02/12. I have read here that the best way is to get a credit card and to keep the balance below 9% of the cl. I thought I also read that you need to make sure to get a card that reports to each credit agency. How do I know which cards report to who?
See my post here: http://ficoforums.myfico.com/t5/Bankruptcy/How-to-rebuild-your-score-after-a-ch7-BK/td-p/1384075

I know you filed a 13, but the method I wrote is basically the same (except that you should get a secured card while in the ch13 plan, and maybe a small auto loan).

-SM

I do like a lot of what you said especially if it someone that is not fully understanding how BK works and getting new credit.

I know some choose to not even fix incorrect stuff on credit report after bk and apply for no credit because they don't want to end up back there, but I also see posts all the time 2-5+ years into BK Discharge just now jumping into the rebuild and fixing mistakes from the bk reporting.

I think unless you just REALLY can't handle have credit you are doing yourself great harm in terms of fixing your credit report.

Beccause as many of rebuilders walk away with no credit and you have to start with the Orchard, or Capital one or credit one... if you got those right after bk and now it's 3 or 5 years later and you have done nothing else... you are that far ahead.

Now where I differ:

Do you have any cash laying around or can you get some pretty quickly (maybe income now that you are not paying all the high bills I assume mortgage, credit card, or medical)

If you can gather up $1000-$2000 skip the orchard and the cap1.

Lets go straight to your local bank or Credit Union even better.

Get a secured Credit Card

if you have some more cash, Credit Unions (many) offer the secured type credit line or loan as poster above states) open one of those also.

You need to first get your list of who you burned in your bk, that will disctate the directions you go with future new apps.

If you have no money to store away but you can swing $20-$50/month then I say we might be back in the cap1, creditone, orchard range.

I probably would just find myself a good 3 credit report watching service... keep it a month or two and call to cancel and they will cut the monthly fee in half usually.

If you can afford both then by all means get the EQ Fico tracker but right in beginning especially if you find errors from the bk, you need to be able to pull your reports daily,weekly, monthly! don't pay attention to the scores, just whats showing negative on you and how accounts are updated and reported.

If you carried a car or house through bk, or are AU on anyone elses accounts, your rebuild might be WAY FASTER!

Further more, don't drive yourself bananas about this util. thing.... right in beginning just make sure to get things paid on time... then as your credit is getting better and you are starting to look at going to next tier of rebuilding and moving to better banks and cards, then you can sit down and figure out getting that util just perfect for new apps.

Re: credit cards post bankruptcy

SoulMaster — Wed, 09 May 2012 23:34:12 GMT

I disagree with secured cards unless there is a 100% guarantee that they will graduate to unsecured w/o changing account numbers.

The fact is, there are lenders who won't lend to people who have secured credit cards reporting (they're listed as secured on your CRs). I'd skip right to unsecured and take it slow.

The reason I put the Orchard/C1 stuff in there is that there is a 98% certain approval. With a CU card, chances of approval are good, but not great. I didn't want my friend wasting inq's and not getting the cards, which is why they are there.

Finally, I DO agree there are ways that are probably better than mine to get rebuilt... but mine works, and it's simple.

-SM

And no, if you carry a house or car through BK, it probably won't ever report again, unless you reaffirm (then it's 50/50), which is usually the worst possible thing you can do to yourself.

Re: credit cards post bankruptcy

Anonymous — Wed, 09 May 2012 23:55:48 GMT

@Anonymous wrote:
I am trying to rebuild my credit. My chapter 13 discharged 02/12. I have read here that the best way is to get a credit card and to keep the balance below 9% of the cl. I thought I also read that you need to make sure to get a card that reports to each credit agency. How do I know which cards report to who?

IMO, a secured card is one of the best ways to go. Put down a significant amount so you can use it normally. Local Banks or CU are preferred but Capital One has a decent credit card.

At this point, keeping the balance below 9% is useless. It will only matter when you get to the point that you are ready to apply for credit, you can pay it down then for a score boost.

Re: credit cards post bankruptcy

Creditaddict — Thu, 10 May 2012 00:47:48 GMT

@SoulMaster wrote:
I disagree with secured cards unless there is a 100% guarantee that they will graduate to unsecured w/o changing account numbers.

The fact is, there are lenders who won't lend to people who have secured credit cards reporting (they're listed as secured on your CRs). I'd skip right to unsecured and take it slow.

The reason I put the Orchard/C1 stuff in there is that there is a 98% certain approval. With a CU card, chances of approval are good, but not great. I didn't want my friend wasting inq's and not getting the cards, which is why they are there.

Finally, I DO agree there are ways that are probably better than mine to get rebuilt... but mine works, and it's simple.

-SM

And no, if you carry a house or car through BK, it probably won't ever report again, unless you reaffirm (then it's 50/50), which is usually the worst possible thing you can do to yourself.

Yeah I'm going to old firm on the secured cards and maybe that's because I did both... I'm always going to be the one running into way left field... (ME) Got Both, I got Bank of America Secured, National City Secured, and a local CU Secured. I also got Sears HSBC, Best Buy HSBC, Credit One.

Bank of America I really liked and really worked (at first) it unsecured, it got CLI... but then I got caught in the "Lets review EVERY account that a customer calls us" and it got closed 18 months after opening as secured!!! (that made me really mad!)

the funny thing is out of all of them the Credit One was actually the best if you want to look at growth during time frame, not cheapest thats for sure... but I never got turned down for my small CLI, something you might get with Orchad but then probably never again.

I didn't do it but yes Cap1 Secured seems to be a great option.

*** Now I'm not sure how or who you came to the statement that banks will deny you because you have a secured card?!

If Im not mistaken you told poster to open a secure loan, maybe installment different then revolving but I never had issues because I had a secured card.

and I guess I only have the info from my friend filing bk and his condo was not in it and apprently had no issue with reporting because he came through bk and probably month or two after got pre-approved for Cap1 and he sent it in and couple weeks later a pretty new Capital One Card came in mail with.... $5,000. CL... BOOM!!

HAHA, of course doesn't always work out that way for everyone, I have heard of people keeping house and having major issues after.

Re: credit cards post bankruptcy

bichonmom — Thu, 10 May 2012 06:58:21 GMT

The benefit of a secured card over something like Orchard, etc. is the fees, for one. Also, if you can build your deposit up, you can have a decent CL, instead of the toy limits. That way, when you start apping for unsecured CCs, you'll be more likely to start w/a decent CL instead of $300 or $500.

Look into local CUs and see if they offer secured CCs and if they'll graduate. IMO, they'll be more likely to grow with you than the "Big Bank" secured CCs.Even w/a secured CC, you *still* have to qualify for it though. Not sure how soon after a BK, they'll approve you.

Another option is to set up a couple of secured loans (sometimes called a passbook loan). You can deposit say, $1k in one acct. They borrow back usually around 90% ($900). Then you can take the $900 (or add $100 and make it another $1k) and deposit it into another bank/cu and borrow 90%. Then you can take that cash and put it into a secured CC with one of those CUs or another one.

One caveat w/secured loans is that you need to be sure they will report to all 3 CRAs. You'll usually need to request this, but most will do it. It helps you to get more positive TLs going with the same amount of cash. Also, secured loans usually have really LOW %, so it's not going to cost you a lot to rebuild your credit that way.

Re: credit cards post bankruptcy

Anonymous — Thu, 10 May 2012 07:17:00 GMT

Secured cards like Orchard and Capital One and others don't report as secured on credit reports. In fact, I'm not aware of one secured card that reports as secured (although) they may exist. If they don't report as secured, there is no way for other creditors to determine that it is a secured card.

Wolf3 is right about utilization. There is no reason to worry about the utilization until you are ready to apply for credit. In fact, good use of the card may encourage card issuer to give you a credit line increase. Of course, don't use the card for what you can't pay in cash.

Bichonmom is 100% correct about the advantages of secured cards. If you have the cash, a secured card will show a much higher limit instead of some toy limit you are likely to get. Once your score gets high enough for unsecured cards, you will get a much higher limit than you would have only having unsecured cards with toy limits. You can get your deposit back then.

Re: credit cards post bankruptcy

Revelate — Thu, 10 May 2012 07:41:09 GMT

Crashem: actually most secured cards report as secured. Cap One / USAA are two exceptions, I hadn't heard about Orchard's as to whether it reports as secured but that's a moot point now that C1 owns them. BOFA, USBank, Wells, most CU's, others all report as secured and they are the overwhelming majority.

Bichonmom: I very much like the suggestion on a secured loan, but it's usually 100% LTV from most places. USAA, Wells, DCU, NFCU, and many others provide this sort of loan; however, the buy in price is usually higher than than the deposit required for a secured card. Actually, with DCU (think this is open to everyone with a small donation), I believe they have a product where they "loan" you the $1000 required for their security deposit into a savings account you can't touch, so you're not out anything initially from your pocket, you make payments on the 1K loan, and you get the 1K once you finish paying off the loan.

I don't know how they report though, the USAA one doesn't report as secured much like their cards and that's the one I personally went with, but it's a $2500 entry fee (so to speak, you get the entire cash back on the 100% LTV loan) and the effective APR is only 2%. It's about the cheapest possible tradeline you can finance if you have the initial stake to do so.

Re: credit cards post bankruptcy

Anonymous — Fri, 11 May 2012 16:52:04 GMT

I was actually approved for a capitol one unsecured card with no fees. I do have a mortgage that I have always been current on.

Re: credit cards post bankruptcy

SoulMaster — Fri, 11 May 2012 17:23:26 GMT

FWIW, I hit a 677EQ myFico today using my plan. I'm 18months 5 days out of BK. I'm not saying that there are other plans that may work, I'm saying that my plan absolutely does and it's very simple.

-SM

Re: credit cards post bankruptcy

Anonymous — Fri, 11 May 2012 17:44:42 GMT

Are you guys sure of your information on how secured cards report? Just talked to my banker at Wells Fargo and he said their secured card should report like a regular card. Where are you guys getting your info from?

Talked to my local CU as well, they said they report their secured card and there is no way different than how a unsecured card is reported.

The fact is I know using secured cards with higher limits works. Helped my buddy with this credit situation. His first unsecured card had 7.5k limit likely because he had multiple 5k secured cards. Doubt he would have gotten it with a bunch of unsecured toy limit cards. BTW, he did orchard and I know for fact it didn't indicate secured in any way. And neither did the other 2 secured cards (public savings, and CU).

If some report as secured card, then don't get those. But the advice others gave that if you have the cash, you can have a leg up doing secured cards is still correct.

Re: credit cards post bankruptcy

SoulMaster — Fri, 11 May 2012 17:52:25 GMT

Apparently it's a YMMV thing.

from: http://www.bankrate.com/finance/credit-cards/10-questions-before-getting-a-secured-credit-card-2.aspx

7. Do you report to all three major credit bureaus?
The reason for having a secured card goes far beyond being able to buy CDs online. It's a vehicle for building a good credit history. If the issuer doesn't report, you've lost a major benefit. (Tip: If you start getting mailers offering you unsecured cards after you've made several months of payments on time, you'll know that the bank is reporting.) Ask if the issuer will flag the report to the credit bureaus as a secured card. Consumer Action points out that such a flag could be a deterrent to rebuilding credit.

They agree though, if it reports as secured, it may hinder you.

-SM

Obviously, if you can find a Secured card that doesn't report "secured" then go for it! But I'd still be very careful about apping for too many things too fast post-BK.