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I'm glad this board exists with some people willing to provide advice based on their experiences.
My wife and I are nearing the end of a Chapter 13 Bankruptcy with 100% pay off to the creditors (will make the last payment in October).n
I've made regular car payments during the course of the bankruptcy amd the car was paid off last month.
After discharge, we plan on each getting a secured credit card and using them enough to get positive reports to the services with balances being paid in full every month.
We also plan on each maintaining separate savings accounts as the primary place to park our funds.
What are some of the best secured credit cards that people might recommend? Also, what percentage of established credit limit should we each use on a monthly basis to result in such use being a positive for reporting purposes? I've seen different percentages and am trying to find an approximate "sweet spot" for usage that will result in a good outcome.
Besides these very basic and obvious steps, is there anything else that we should be doing to insure that the slow climb to good credit doesn't take any unnecessary detours?
Thanks for any feedback...it has been a long five years for this Chapter 13 and it feels a little scary and disconcerting to anticipate that it'll actually be over soon and we'll be moving into the uncharted territory of rebuilding credit. I understand hat this will take work and discipline and isn't something that will magically happen overnight, but I'm just trying to avoid shooting myself in the foot (something for which my wife says I have a real talent).
Hi djdutch, and welcome to the forums!
Congrats on your soon-to-be completion of Chapter 13. A vast majority of Ch 13's are not completed and discharged - they are dismissed without being completed - so pat yourself on the back! Nice work!
Your regular car payments are a great credit rebuilder. Use your soon to be acquired credit cards regularly, making sure your reported balances are no greater than 9%. Being more particular about the percentage rate doesn't seem to yield different results - staying under 9% will do you well. Make sure less than half your accounts report a balance, make sure they're all under 9%, and make sure at least one reports a balance - for the greatest FICO score impact.
All installment and revolving accounts help you build, but you will want to secure at least one bank/national credit card (or revolving account) for FICO scoring purposes.
Best luck to you!
Thanks for the response.
One other question.
Does the size of the secured credit limit make any difference for FICO scoring purposes? In other words, is there an advantage to having a $1000 secured limit versus $50 assuming full and timely payoff of the 9% balance every month?
We would have a tendency to go for the lower limit but want to make sure that we wouldn't get more benefit from the higher limit for FICO reporting.
I appreciate it.
@djdutch wrote:
Does the size of the secured credit limit make any difference for FICO scoring purposes? In other words, is there an advantage to having a $1000 secured limit versus $50 assuming full and timely payoff of the 9% balance every month?
dj,
Good question. No the size of your CL does not affect FICO scoring. Of course, larger CL's make utility easier to handle.
Sometimes, if you pull a FAKO report and score you will see comments on CL's affecting scores - ignore all FAKO scores and advice. Following FAKO advice can, and will, negatively impact FICO scores. Stick with the real thing.
A helpful guide to seeing what will affect FICO scores is the listing of FICO reason codes. You can google them, or find them here: