Saturday, December 1, 2012

Rebuilding credit post bankruptcy

Rebuilding credit after a bankruptcy seems to be a necessary evil. While on the one hand I have really come to like our "no credit card lifestyle" we have led for the past several years on the other hand there are some benefits to a higher credit score.  Auto insurances look at your score to assess what kind of risk you might be. There are even some employers who will look at your credit score/history to assess what type of employee you might be.

While I don't feel a strong desire to have credit cards in my wallet and no desire to pay any interest on making credit card payments, on some levels I do want to rebuild my credit score. The first reason is just plain basic. A good credit score means you are doing it right. I like to feel like I am doing things the right way. A good credit score makes me feel like I am a responsible person. A second reason is that maybe at some point down the road we will want to buy a new home. I hope we get to buy a new home someday in the future. This isn't where I envision living the rest of my days - neither this house nor this overly congested traffic filled area. We'll need to rebuild our credit score to someday qualify for a new home loan (and by "new" I don't mean a brand new home - just "new" to us), Even if we don't ever move, there is very likely a time when we'd like to refinance to a lower interest rate (like now! wish I could!) or combine the home equity loan with our regular mortgage.

I recently got approved for a Target credit card with a $300 limit. I used it, got the bill, and paid it off. I have used it again and will do the same next month. I had also read that a good tool for rebuilding credit was a gas credit card, so I applied for a Shell card and was approved on that, too. I charged $90 in gas my first statement and paid that off yesterday (9 days before the due date). Last week I applied for a Kohl's card and was instantly approved. I charged a little over $50 for some xmas gifts and a comforter for myself. Once I get the statement I'll pay that off in full. 22% or so interest is not in the monthly budget. I don't EVER want to be making monthly payments on credit cards again! I don't see myself using that card too often though. I just don't buy myself much in the way of clothes and such. Mostly I shop there for gifts and DD might do a little school clothes shopping there every summer.

I feel these cards, with their low credit limits, are a good start to rebuilding my credit over the next few years. I'm "good" now - nothing else I want to apply for. I used to have a JC Penney card - had it since I was 18. Rarely used it and didn't owe anything on it when we filed bankruptcy, yet they cancelled me. I'd had a Macy's card that long too yet they did not cancel me. I used to shop at JCP for most all my clothes, bedding, gifts, etc (though I rarely charged my purchases) but don't feel the need to reapply for their store credit card. I really don't care for the changes to their stores they've made, anyway.  I have no desire to apply for a bank credit card that I can use anywhere - that would just be a bit too tempting. DH has no willpower and I have a hard time saying no when he gets into one of his instant gratification moods. Not having any credit cards available these past few years has been great for curbing his whims to buy something right now (usually a race car part) and he now is good about saving and waiting for what he wants, but I know that with a credit card he'd fall into the old way instantly. I shop and get prescriptions at Target on a regular basis, I get gas every week and when I do occasionally shop at a clothing/home decor type store I usually go to Kohl's because it is only a mile away and I don't have to trek through the traffic to the mall. I feel satisfied now that I'm on a better path to rebuilding my credit, rather than just going along with no credit cards.  Hopefully it will help with insurance rates and at some point down the road if we get a chance, either refinance or sell our home and downsize a bit to a more desirable area we will be able to get a home loan at a decent rate.


  1. I think the way you are doing it is the right way. Slow and steady charge a little, pay it right away and just give it time

  2. Sounds like you are certainly on the right path to rebuilding a good credit score. BTW could you possibly call your insurance co. and ask what it would take credit-wise for you to quality for lower rates? They might have some tips for you? Just a thought. Good that you realize getting a major bank cc would be too tempting for the husband - better to not have one at all than to have one and risk it.

  3. We are doing the same thing right now. After YEARS of going without credit cards and using cash only, we are now finding that lenders won't consider lending to us (refinancing) unless we have up to date credit lines. They are actually telling us that we have NO credit in other words. We have older credit lines of good credit but, as time passes, the value of those credit lines diminishes. We just acquired a Capital One CC ($1000 credit limit), a Target credit card each ($300 each), a Wells Fargo CC ($1000 credit line) and the spouse just received notice of receiving a 4th CC. That will be it. Don't worry ~ we are NOT tempted to run these lines of credit up. We'll just put a little something on each one and work our way up to the better credit cards that actually give out rewards!!

  4. Living prudently is quite hard at first, and it takes time getting used to. But the rewards are great. Saving is great. It takes away the edge of always worrying to meet credit card payment deadlines.

    - Jaden Allred -

  5. This is certainly a way of rebuilding credit. However, if you want to really get serious about solving the problem I would suggest hiring Lexington Law. They have helped over a half a million people and have been in business since 1991. They are perhaps the most reputable credit repair company.

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  9. Your “no credit card lifestyle” is really a smart idea to rebuild your credit after filing for bankruptcy. I agree that overspending with credit cards is one of the major reasons why people get bankrupt. And in addition, if you can’t avoid availing a credit card, it would greatly help to set a limit to using it. That way, once you reach the limit, you can no longer use it and spend.

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