topic Re: BK13 Discharged - When to rebuild? in Rebuilding Your Credit

BK13 Discharged - When to rebuild?

castor4072 — Mon, 22 Apr 2024 17:45:08 GMT

When I get my discharge for my BK13, when do I start rebuilding? Immediately, like 2 days after, a week, a month or? Will my scores go up in time if I DONT get new CC accounts showing activity? What have people done SUCCESSFULLY that had "proven" results from what you did. Just trying to get a game plan as I'm 2 months away from completion. Any help is appreciated!

Re: BK13 Discharged - When to rebuild?

Horseshoez — Mon, 22 Apr 2024 18:22:50 GMT

@castor4072 wrote:
When I get my discharge for my BK13, when do I start rebuilding? Immediately, like 2 days after, a week, a month or? Will my scores go up in time if I DONT get new CC accounts showing activity? What have people done SUCCESSFULLY that had "proven" results from what you did. Just trying to get a game plan as I'm 2 months away from completion. Any help is appreciated!

Congratulations on nearing the end of your Chapter 13, it is a long hard slog, been there, done that, got the freakin' tee-shirt.

Regarding your question, I was stupid about starting my rebuild and can offer advice based upon my naïve stupidity as well as what eventually worked.

From the department of, "don't do as I did":
- Do not start applying rright out of the gate (at one point I had 18 hard pulls and a single secured credit card to show for my efforts).
- Don't expect to have a monster credit score until your Chapter 13 falls off your credit reports (roughly 7 years after your finling date).
- Don't apply for any high end cards..., yet.
From the department of, "here is what worked quite successfully for me":
- Wait four to six weeks, get your credit reports from annualcreditreport.com and go through it to make sure all of your balances are $0.00.
- Resist the temptation to dispute things which are marginally incorrect like late payments during your plan period, they are irrelevant and are not impacting your score, the bankruptcy notation trumps all other negative notations.
- Skip the bottom feeder cards like CreditOne; you're going to get inundated with offers to apply, resist the temptation.
- If you can afford it, open up a high(ish) limit secured card; I opened up one with a $5,000 secured credit limit and credit this one card with jump starting my successful rebuild.
- With the first card in hand, use it, treat it well, keep the reported balance at or near zero for three to six months and then cautiously apply for an unsecured card. CapitalOne is a good second card as are many credit union cards.
- Once you have two, and better still, three credit cards, it is time to start playing the AZEO game; let one card report a trivial balance of say $10.00 each month and make sure the other card(s) report a $0.00 balance.
- If you don't have a mortgage or vehicle loan, consider opening up a Secured Share Loan (SSL) from the likes of PenFed or NFCU. Once open, pay it down to under 9% (which will push your next due date out months, or even years depending on the term of your loan); tthese loans fulfil the "installment loan" portion of the scoring models and will help boost your scores.
- Always keep in mind, building credit is a marathon, not a sprint.

In my case, after I wised up, I took things cautiously, had my secured card graduate after only 6 months, and now, four years later, and even without actively seeking lots of credit (just what I needed at the time), I have credit scores hovering either side of 800, over $60,000 in available revolving credit, a new vehicle (my first in decades), and just this last Saturday I was approved for a mortgage in less than an hour after I completed the application.

Please keep us posted on your journey.

Re: BK13 Discharged - When to rebuild?

castor4072 — Mon, 22 Apr 2024 19:17:42 GMT

@Horseshoez

Sounds like a LEGIT plan!! I just checked with my credit union. They have SSL and Secured Credit Cards as well. Kill two birds with one stone!

Still trying to grasp how the SSL works....say, if I take a 10K loan, open it up with that amount, first payment make a huge payment down to $900 bucks and let it ride until the next payment years down the road? Can you put it in lamens terms example for me? I'll continue to do my due dilliengce as well. Any help is appreciated.

Re: BK13 Discharged - When to rebuild?

Horseshoez — Mon, 22 Apr 2024 19:28:04 GMT

@castor4072 wrote:
@Horseshoez

Sounds like a LEGIT plan!! I just checked with my credit union. They have SSL and Secured Credit Cards as well. Kill two birds with one stone!

Still trying to grasp how the SSL works....say, if I take a 10K loan, open it up with that amount, first payment make a huge payment down to $900 bucks and let it ride until the next payment years down the road? Can you put it in lamens terms example for me? I'll continue to do my due dilliengce as well. Any help is appreciated.

Not all SSLs work that way, hence the fact I specifically identified PenFed and NFCU. A very common SSL for both of those two is $3,000 (some say $3,001); once open, you set the term to some number of years (I think I did 3-years on mine), pay it down to something like $260, and then the next due date for a payment is pushed out about 34 months. Some credit unions don't allow that, what is due monthly is static and if you pay it down, then the SSL gets closed early so you cannot reap the scoring benefit of having a loan under 9% for more than a few months.

In your case, I'd have a very directed conversation with your credit union to confirm this is how they implement their SSL; if they don't, then I wouldn't bother with them and would look at NFCU (if you are eligible to join) or PenFed (anyone can join). Even though I am a member of both credit unions, when I opened my SSL in 2021 I felt PenFed had the better SSL offering and used them.

Re: BK13 Discharged - When to rebuild?

Horseshoez — Mon, 22 Apr 2024 19:47:22 GMT

One other comment, I wouldn't bother with a $10,000 SSL, there is literally zero benefit to doing such a large SSL.

Re: BK13 Discharged - When to rebuild?

castor4072 — Mon, 22 Apr 2024 19:54:18 GMT

@Horseshoez

Point taken, keep it simple, understood! I'll check with my CU first before PenFed route. Thank you!

Re: BK13 Discharged - When to rebuild?

keekers — Mon, 22 Apr 2024 19:56:21 GMT

Agree with @Horseshoez, and specifically about staying away from Credit One (and similar). Also, regarding the SSL...I did a $3001 SSL with Navy Fed just to get the 60 month term. Higher amounts don't matter.

Re: BK13 Discharged - When to rebuild?

Lurker22 — Tue, 23 Apr 2024 16:47:25 GMT

@castor4072 wrote:
When I get my discharge for my BK13, when do I start rebuilding? Immediately, like 2 days after, a week, a month or? Will my scores go up in time if I DONT get new CC accounts showing activity? What have people done SUCCESSFULLY that had "proven" results from what you did. Just trying to get a game plan as I'm 2 months away from completion. Any help is appreciated!

my 13 was discharged 12/27/22, was picked up within 2-3 days by the CR's - on 1/2/23 I applied for CO QS and approved with a $10K limit, also applied for WF AC and approved for $3K, 1/5/23 I took a chance and applied for VZW VS and approved for $4K, at the time I had NFCU CR that had graduated 5 months before and 2 secured USB cards that had been open for 12+ months