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Question By
bandj05

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How do I build my credit after a bankruptcy?

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Helpful to 56 out of 58 people

I have actually been through this. Start with a secured credit card. I went with Open Sky Secured Visa. I have a $300 limit. I paid about $75 application fee. I sent in $300 plus the activation fee. They sent me a card.

I DON'T pay it off completely every month. I pay all but $50. I started by paying it off completely every month but wasn't seeing much of an effect on my score. I talked to a friend about it who has excellent credit. Her advice was to pay all but $50 every month. It works! Also, they are awesome about reporting regularly. I pay every two weeks to avoid missing a payment. A missed payment will kill you when trying to get a loan. If you want a higher limit, you just request it from the company. Once approve, you send them the additional money.

After 1 1/2 yrs with Open Sky, I applied for a Capital One Platinum card and got approved with $300 limit. Within 6 months (no missed payments with them either) they bumped my limit up to $500. I have those 2 credit cards, that's it!

Don't apply for new credit unless you have to. Those inquiries will ding you.

Have some patience. It's been about 3 years since I started my journey. I started with a BK, foreclosure, and auto repo due to loss of employment. I am now buying a house - set to close before the end of the month. It's possible to use Credit Karma to improve your score. But know that this is not something that will happen overnight. Just work on getting the negatives off your credit report and building credit. On time payments are VERY important too!

Hope this helps bandj05!

Reply by
CRole121

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Helpful to 0 out of 1 people

Curious...I had BK in 2010 mortgage (house) included..not reaffirmed. Auto loan...reaffirmed and this month paid in full since reaffirmation. Trying to short sell house (I know this helps only the Realtor buyer and bank..but did want to avoid FC or abandoning property) but not getting anywhere, may ask about cash for keys. Question is the bankruptcy is on your credit report, would a foreclosure show afterwards even if house was included in BK..I may be assuming your house was included in BK. I have been working on building up credit and have seen improvement, just scared that FC will ago on my report and mess it all up. 

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22 People Helped

Slow and steady wins the race...patience

Helpful to 22 out of 23 people

Let me start by saying the worst part of bankruptcy is coming to terms with the fact that you have to file.  Once you've hired an attorney it's all uphill (or at least it was for me).  When I filed for Chapter 13 back in 2009 my credit score was just under 600.  Five years later I have a credit score of just above 700 - and that's prior to my case actually being closed (I've made all 60 payments on schedule - now just waiting for the case to be finalized).  Below is what I learned along the way:

To start, get a secured card (if you can put together the cash for this).  I had to scrape together $500 to get a secured card when I started over.  From there I ended up getting an unsecured card a couple months later.  Usually the fees with these are high ($99 annual fee + 30% interest) but if you're not looking to carry a balance it's not that awful.  

I'd also recommend contacting Barclaycard - which is a British bank.  Barclays was the only large bank that would issue me an unsecured card with no annual fee - I believe it was a year after my filing that I got this card.  I started with a limit of $500.  After a year I had requested $1000 limit, then $1500.  I've had that card four years now and my limit is $6,000 at this point (even though I don't carry a balance).  I'll have this card the rest of my life because this was the only legitimate global bank that would give me a card when I needed it most.

Purchasing a home will increase your score dramatically.  I purchased my first home 2 1/2 years after my filing (and 3 years after my foreclosure).  I financed via FHA - which is a common route these days.  One thing you'll want to be careful of if you're purchasing via FHA is the fees have gone up dramatically since the housing collapse.  You now have to pay 2% up-front in fees, and annual fees run as high as 1 1/3%... so if you're buying a $200,000 home it will cost you $4,000 up-front plus an additional $2600-2700 a year just for the FHA loan.  The upside is that this will boost your score substantially.  Most banks do require either a 640 FICO score in order to get an FHA loan, so keep that in mind as well.  

If you're looking to purchase a car, the good news is that the subprime auto loan market is rockin' like it's 2007 all over again.  Subprime loans make up more than 1/3 of all new car purchases now, so if you think you can manage the payments just about anyone selling a car will finance you at this point.  

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9 People Helped

rebuilding after ch 7 bk

Helpful to 9 out of 10 people

I filed chapter 7 bk in January 2014...as soon as I filed, my credit score tanked, dropping to 480!!! Since filing, I have done a few things to rebuild, and as of 12/1/2014, my score is back up to 600. The first thing i did was went to my credit union and established a credit builder loan. Basically, they loan you $1000, put it in a CD (you cant touch/withdraw it). you must make monthly payments towards the loan for 12 months ($86/mo) and each month when you make the payment, they report it to the credit bureaus. After the 12 months of payments, the $1000 then becomes yours...so not only is it helping your credit, it will help you save. I did this immediately after filing. 3 months after discharge, i applied for a line of credit at tire shop (GE now Synchrony Bank), and was approved for $1500...bought rims and tires, and have made on-time payments every month. After getting approved for this, i got excited...went to a furniture store and applied for a line of credit (GE also) and was approved for $2500...i only used 1000 of this, and have since paid it off. in the last month, i applied for a line of credit at a clothing store that i shop at...Maurices and Lane Bryant, being approved for both. $150 for Maurices and $250 for Lane Bryant. Now that my score has jumped to 600, i will hold off on any more inquiries and just focus on making my payments on time. Once a year has passed, i will apply for a capital one credit card...hoping to be approved. Good luck, hope this helps.

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2 People Helped

Bankruptcy

Helpful to 2 out of 3 people

My husband and I had to file bankruptcy in 2007 due to medical issues (husband passed away in 2008).  I'm trying to rebuild my credit score (it's now in the high 600's).  I have 3 credit cards.  I only use one and I pay the balance off entirely every month. 

I keep hearing discrepancies about pay it off in total every month or don't pay it off every month.  i.e. leave $50 on it.  I'm confused.  Which is better?  I own my own home and my car will be paid off in January.  I miss absolutely NO payments.

What else can I do to push my score higher?

Thank you.

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0 People Helped

Lost

I've filed chapter 13 an I don't know where to start from this point, I have a prepaid American Express card I've had for over year now an a checking account with 5/3rd I'm trying to build my credit my score is under 600 an I'm trying to get back on track, any suggestions??

Top Contributor
65 Contributions
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Helpful to 5 out of 17 people

You either have connections (ala Donald Trump and his handful or so of bankruptcies) or you wait 7 years for it to drop off.

If you're talking about the part after it drops off, well, you're essentially just like an 18 year old kid getting their first CC.  Get a credit card, use it, pay it off in full every month, get a second card maybe a year later (and hopefully with a higher max limit), perhaps call your first card and ask for a limit increase.  Use one or both cards regularly, but use them both at least once, pay off balance in full every month.  After another year has gone by, get another credit card; again, hopefully this one will have a higher max limit, as your score should have increased. If you used both cards regularly, call them both and ask for a limit increase (or an APR reduction... it won't help your credit score, but if you ever keep a balance...).  Use all three of those credit cards, or just use one regularly and use the other two once.  Wait a year, get a fourth card.  Repeat until you have half a dozen cards preferably, it does start to hurt your credit score if you have too many open revolving accounts, but 6 is fine.  You can get your limit increased by calling them, or by "maxing out" your card.  Just be sure to pay off the whole balance at the end of the month.  When CC companies sees that it was maxed out in their review, they'll likely raise the limit if you have a good history.

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