topic Re: How to rebuild credit without applying for new credit? in Rebuilding Your Credit

How to rebuild credit without applying for new credit?

tehdrizzle — Tue, 23 Jun 2020 16:06:13 GMT

Does anyone know how to rebuild credit having just a mortgage once discharged from their bankruptcy? My FICO report tells me I have high utilization on my mortgage account which is hurting me since I don't have a credit card. All institutions around where I live will not extend credit to you until you are out of a bankruptcy for 8-10 years, and I do not plan to use any type of credit card again. The issue is that we would like to get a new house built down the road sometime in the next 15-20 years and avoid spending 400k in cash. Any advice on how to get into a good position for a house in that timeframe without using credit?

Re: How to rebuild credit without applying for new credit?

Anonymous — Tue, 23 Jun 2020 15:55:56 GMT

You cannot build credit without using credit. You will eventually have a clean report due to the bankruptcy aging off, but you will still have a low score as you won't have any accounts showing on-time payments, age, or the ability to manage credit responsibly.

I'm afraid you may need to rethink your strategy. 🤔

Re: How to rebuild credit without applying for new credit?

tehdrizzle — Tue, 23 Jun 2020 16:09:05 GMT

Unfortunately it looks like we are up the creek then. We have no desire for a credit card, and nobody in this area will even consider rebuilder loans for anyone that has been in a bankruptcy within the last 8-10 years. Wouldn't a mortgage report favoribly on the score and report if paid ontime? I also don't see how a mortgage can impact you negatively with the reason being the "balance/utilization on this account is too high"

Seems like credit in general is a trap to me and I'm much better off not using it at all.

I'll just be patient and wait until the bankruptcy and all associated negative items drop off.

Re: How to rebuild credit without applying for new credit?

Anonymous — Tue, 23 Jun 2020 16:19:30 GMT

I would look into a self loan get the 48.00 a month plan then at the end of the term when you are able to get the $,CD back and all of the money has matured roll it back into another self loan.Since you said you were going to go for 15 to 20 years before you buy your house if you roll the self loan at $48 a month over three times then go for the one that's 150 a month. That will give you some credit information on your report.

Re: How to rebuild credit without applying for new credit?

dragontears — Tue, 23 Jun 2020 16:23:15 GMT

@Anonymous wrote:
I would look into a self loan get the 48.00 a month plan then at the end of the term when you are able to get the $,CD back and all of the money has matured roll it back into another self loan.Since you said you were going to go for 15 to 20 years before you buy your house if you roll the self loan at $48 a month over three times then go for the one that's 150 a month. That will give you some credit information on your report.

The OP has a mortgage, a secure loan is not going to do anything for their score

Re: How to rebuild credit without applying for new credit?

tehdrizzle — Tue, 23 Jun 2020 16:27:33 GMT

I already looked into secured/self loans and credit cards locally. I bring in 10k per month NET, not including my Wife's income and we were told by all institutions locally that they would need a co-signer for any type of secured loan. We don't have anyone to co-sign for us, so they then told us we would need to wait 8-10 years post bankruptcy, but would still possibly need a co-signer. Again, it seems like credit is a trap with all of the loop holes and contradictory statements instutions make. I think we'll just pay cash going forward. I think in that 15-20 years before we buy a diffent house we will have more than enough to pay cash for the new build. Thanks for the replies.

Re: How to rebuild credit without applying for new credit?

dragontears — Tue, 23 Jun 2020 16:29:39 GMT

@tehdrizzle wrote:
Unfortunately it looks like we are up the creek then. We have no desire for a credit card, and nobody in this area will even consider rebuilder loans for anyone that has been in a bankruptcy within the last 8-10 years. Wouldn't a mortgage report favoribly on the score and report if paid ontime? I also don't see how a mortgage can impact you negatively with the reason being the "balance/utilization on this account is too high"

Seems like credit in general is a trap to me and I'm much better off not using it at all.

I'll just be patient and wait until the bankruptcy and all associated negative items drop off.

I don't know what cards you have looked at but no way do you need to wait until your BK is off your reports.

You don't have to carry a balance on a credit card

You don't have to have high credit limits

You don't need a bunch of cards.

If all you want from a credit card is to build your score for future mortgage all you need is an open card. (FYI if you ever have to rent a car 99% of the time you will need a credit card)

Without a credit card your scores will be stuck in the 600s

Do you belong to any credit unions?

Who did you burn in BK?

Re: How to rebuild credit without applying for new credit?

tehdrizzle — Tue, 23 Jun 2020 16:31:35 GMT

We already looked into the secured credit cards/credit builder loans. We were told even though my Wife and I bring in a combined amount of $13k per month NET, and have no debt except for our mortgage $900 per month, and utilities totaling ($900-1000 per month) that we would need a co-signer. We don't have anyone that could co-sign for us, so we were then told we would have to wait 8-10 years (one of the instutions said it could be 10-12 years) before they would consider us, and we would still most likely need a co-signer.

I think using cash is the smartest way and best way to go about purchasing a new house 15-20 years down the road. It's just a bummer because we really wanted to start a family this year and needed a larger house to make the room.

Re: How to rebuild credit without applying for new credit?

tehdrizzle — Tue, 23 Jun 2020 16:35:27 GMT

Well thankfully when I travel I just use a company credit card to make reservations and rent vehicles. Yes, the credit union told us at least 10 years until they would even consider it and we would definitely need a co-signer. Citi, Capitol 1, Home Depot, Lowes, Best Buy, Discover, and Mastercard were the bigger names between the Wife and I that got burned during the bankruptcy process.

My scores are already in the low to mid 600's so if they stay there until this falls off I'm fine with that, especially if I never need credit again.

Thanks for the replies!

Re: How to rebuild credit without applying for new credit?

Anonymous — Tue, 23 Jun 2020 16:37:40 GMT

@tehdrizzle wrote:
Unfortunately it looks like we are up the creek then. We have no desire for a credit card, and nobody in this area will even consider rebuilder loans for anyone that has been in a bankruptcy within the last 8-10 years. Wouldn't a mortgage report favoribly on the score and report if paid ontime? I also don't see how a mortgage can impact you negatively with the reason being the "balance/utilization on this account is too high"

Seems like credit in general is a trap to me and I'm much better off not using it at all.

I'll just be patient and wait until the bankruptcy and all associated negative items drop off.

You don't need to get a credit card from anyone in your area. Look into rebuilder or secured cards such as Discover, Capitol One, or Citi. I highly recommend staying away from more "predatory" credit builder companies such as Credit One, especially if credit cards have already left a bad taste in your mouth.

Get 2-3 cards. Keep them at low limits. Use them once a month, let them report a balance for 3-6 months before implementing an AZEO strategy. A few cards with $3-500 limits and a $50 spend per month shouldn't get you into any trouble, nor should it be hard to plan around.

There are benefits to having credit cards beyond just building your credit profile. Extended warranties, insurance coverage, cash back... credit works for you if you want it to. Never spend more than you can pay off in the same month, never buy anything you don't need simply because you have the available credit for it and generally speaking you'll be fine.

Re: How to rebuild credit without applying for new credit?

tehdrizzle — Tue, 23 Jun 2020 16:42:02 GMT

Citi and Captiol One already shot us down saying that we would need a co-signer as well. Once I told them we simply don't have anyone that could do that for us, they said we could try again later once the bankruptcy has aged several years. This really does seem to be the new normal from what I'm seeing. I never did like Discover so don't plan on trying them.

Re: How to rebuild credit without applying for new credit?

K-in-Boston — Tue, 23 Jun 2020 16:45:08 GMT

You burned MasterCard? 🤔

There are thousands upon thousands of data points of people successfully re-establishing their credit after a bankruptcy here. Just because one credit union is telling you that you need a co-signer for the next decade does not make it so.

Without a single revolving card product it will be a very long road to having acceptable scores. When things like car loans can be free or essentially free, there is really no reason to go cash-only. Plus you'd be giving up rewards and consumer protections by using a debit card when cash is not an option.

There are myriad products that you could qualify for now without a co-signer.

Re: How to rebuild credit without applying for new credit?

K-in-Boston — Tue, 23 Jun 2020 16:49:38 GMT

@tehdrizzle wrote:
Citi and Captiol One already shot us down saying that we would need a co-signer as well. Once I told them we simply don't have anyone that could do that for us, they said we could try again later once the bankruptcy has aged several years. This really does seem to be the new normal from what I'm seeing.

This is definitely not normal, and since neither Citi nor Capital One offer joint credit card accounts a co-signer is not possible and this doesn't make sense.

Re: How to rebuild credit without applying for new credit?

tehdrizzle — Tue, 23 Jun 2020 17:00:02 GMT

That's what I had heard so we were at a total loss when we heard that from them. Also it wasn't just the one local credit union that told us that, we tried 4 credit unions, and 6 different banks. All of which said a co-signer will be needed, and we would be looking at 8-10 years at least to even be looked at by ourselves. We have no other issues such as CHEXsystems, or any history of writing bad checks. We don't even use checks, just cash and we both have 1 debit card, nothing else at all.

I'm perfectly fine with the slow recovery of my score. If it came down to it I'd be fine driving a beater with a heater, I did it back in my teen years. It's just frusterating that we make well over 200k per year gross and can't even get looked at for a $500 secured card.

Re: How to rebuild credit without applying for new credit?

gdale6 — Tue, 23 Jun 2020 17:03:15 GMT

@tehdrizzle wrote:
That's what I had heard so we were at a total loss when we heard that from them. Also it wasn't just the one local credit union that told us that, we tried 4 credit unions, and 6 different banks. All of which said a co-signer will be needed, and we would be looking at 8-10 years at least to even be looked at by ourselves. We have no other issues such as CHEXsystems, or any history of writing bad checks. We don't even use checks, just cash and we both have 1 debit card, nothing else at all.

I'm perfectly fine with the slow recovery of my score. If it came down to it I'd be fine driving a beater with a heater, I did it back in my teen years. It's just frusterating that we make well over 200k per year gross and can't even get looked at for a $500 secured card.

Open Sky will issue one without a credit check, I would get that one ASAP.

Re: How to rebuild credit without applying for new credit?

tehdrizzle — Tue, 23 Jun 2020 17:07:09 GMT

Open Sky was one of the first ones I applied for, after hearing they don't check credit. They denied me due to "having a serious delinquincy", and "high credit utilization". The serious delinquincy is because I have a number of accounts on my report that show as collections, yet were included in the bankruptcy discharge. The mortgage is showing as 100% credit utilization due to no revolving credit on my account.

Re: How to rebuild credit without applying for new credit?

dragontears — Tue, 23 Jun 2020 17:09:44 GMT

When was your BK discharged?

Is all the included accounts reporting properly?

Re: How to rebuild credit without applying for new credit?

tehdrizzle — Tue, 23 Jun 2020 17:11:54 GMT

It was discharged back on April 5th. The morgage has been reporting correctly since we took it out 12 years back, and we have never missed a payment. Every other account I had was included in the bankruptcy and shows in the collections section of my report, but when I look at the item itself, it shows it was discharged in the Chapter 13 plan when all payments had been made.

Re: How to rebuild credit without applying for new credit?

dragontears — Tue, 23 Jun 2020 17:35:06 GMT

Ok so you are almost 3 months post discharge. Still very fresh.

You need to pull your actual reports from annualcreditreport.com (can get free reports every week right now).

Go line by line through all 3 reports and make sure every account that was included in BK is reporting $0 balance and has a notation it was included in BK.

Any account that is not reporting correctly you need to dispute, include a copy of your discharge as your proof.

Once you are positive that all accounts are reporting correctly you should be able to get a card as long as you select the bank correctly.

Banks to avoid Chase (will auto decline as long as BK is on your reports), american express (must be 5+ years if you didn't included them), citi (even their secured card requires more time).

Just to confirm, your BK was a chapter 13?

Re: How to rebuild credit without applying for new credit?

tehdrizzle — Tue, 23 Jun 2020 18:08:51 GMT

I went through every line and confirmed exactly what you are saying. They all indicate they were included in the bankruptcy, and show a balance of $0.