How does a credit builder loan work? I just filed BK13 on 6/5 and am a ways from even thinking about acquiring credit. Just wanted some info on it.
Did you acquire any new credit while in the three or five year BK repayment plan? I know that this is not typically allowed; however, I have heard of instances where this does happen.
The way it works at my CU (Texans CU) may be a little different from other CUs, I don't know.
Anyway, the CU loans me $500.00, but it's strictly on the books. I am not physically given the money.
Then each month, I pay just around $21.00 for 2 years. $500 was the miniumum amount and 6 months is the min loan time.
The principal goes into a savings account that I had to open and the interest (4.5%/year) goes to the CU.
Once the money is in the savings account, I can do whatever I want with it. When I've paid off the loan, I have the $500 and the CU has the interest.
Because they are not giving me any physical money up front, this type of loan is pretty much a guarantee, although it did require a HP.
The way my BK worked is that I was not allowed to carry any unknown, sizable debt without the court's permission. I was never clear on what "sizable" meant exactly.
I suspect that the court would frown on carrying balances on CCs while in BK. My lawyer indicated that strictly speaking you can have credit cards, but the companies won't allow it. I tried to apply for one just a couple of months before my discharge, and was declined because I was in BK. And that was an invitation that I responded to. All it did was generate a HP for nothing.
Welcome to MyFico,
Do you know if someone will be auto-rejected if they burned Discover and Cap One in BK?
Here are some threads which you can consider reading.
First read the initial post of "Scupra's" Bankruptcy Friendly Credit Cards, which was last edited 02/13/2017, as it includes critical information on cards from most vendors.
Bankruptcy Friendly Credit Cards
HOW TO: From BK7 discharge to 700 in 24 months or less!
The Best (and Worst) Secured Credit Cards according to Beverly Harzog' opinion
Official Credit Unions Guide