Credit Building

This is something that I have touched on before but today I would like to tell you how to take the steps to better credit.  Now please understand its going to depend on what your credit is like, there are some worst then others. There are some that need to file a Bankruptcy and others who may need to pay off bills and either way its a starting point. If your paying off debt are you paying in full?  if so you will need to get a letter promising once the payment is made it will be deleted, I'm a stickler for that you want them to send that to your e-mail before you drop a dime on the debt.

Do not pay with a credit card because your opening your card up to any other debt they may be holding on to or what may come. **Note never pay them with a credit card** you want to send them either a check or money order writing on it the account number and paid in full. I say always say paid in full because I have seen where if you settle there is a balance and they will or can sell the balance to a sister company.

Lets talk about a Bankruptcy and after a Bankruptcy, depending on the BK you choose you can start building as soon as your discharged. Your interest rate is going to be crappy and its going to be on your credit for 7-10 years depending which you choose. A Chapter 7 will remain on your credit for 10 years from filing date, a Chapter 13 will remain for 7 years from the filing date.   

The difference of time on the report is this, the Chapter 7 your out of it within 4 months usually and your not paying anybody back you just washing away all your debt so your basically dinged for that. They basically make you pay for it by having it on the credit for 10 years.  The Chapter 13 is 7 years because you've paid back some of the debt so if your in a 5 year Chapter 13 Bankruptcy it will be on your credit for 2 additional years after the 5 years are up which you have served.  Understand you're making monthly re-payments which is a plan and understand that most people don't make it so make sure you under stand this.

Something you need to understand is if you in a Chapter 13 Bankruptcy this shuts you down on everything, your walking on eggs so anything you need to do you must ask your Lawyer or the Bankruptcy court such as maybe applying for any credit. This is harder then the 7 because you can do nothing in the 3-5 years in the Chapter 13 as if you would have done the  4 months for the Chapter 7, but once again 7 will be on your credit for 10 years, the choice is up to you.  remember they are assisting you on getting out of debt.

Ok so now in a 13 with the go ahead from the court or your Lawyer you may be able to apply for a secured credit card **note the word MAY**  its hard to live without a credit card of some kind for an emergency, you may not get it but that's the sacrifice you make.   You can on the day you step out of a Chapter 7 Bankruptcy purchase a car and apply for credit cards, I would advise you to apply for a secured card that way your not turned down, your credit is already suffering you do not want to hurt yourself anymore. ** Note** Interest rates will be high so this is no walk in the park.  Do not run and  purchase a car that's used but out of your price range to look good and it ends up being a clunker that you pay more for and find yourself back in the same boat, find a dealer who will get you into something a couple years old and in good condition.

I'm in no way affiliated with any credit card companies but this is what I have found, apply with Capital one  secured ..WHY? they will raise you credit limit one time on a secured card as long as you have paid on time.  Capital one as well will give you a second card if you apply for a regular one, most cards will not so your stuck with the secured card and if you close it you take a hit to your credit.  Ask a family member if they would add you to their card which will help you as well, just make sure they are responsible, as well because their credit is going to be your credit.

Now start building, if you get a card you must use it, just having it does nothing for you or your credit history, either pay it off monthly before the due date or at least pay the minimum due or down to 30%.
Lenders look for different things on your credit and cards just don't do enough, they look for revolving credit as well, so if you need some furniture you need to buy a piece, don't go crazy. Most stores out there now have a program that I have worked with a couple of client's on who did the 90 day plan or pay all interest from day one if you don't pay it off in that time.  You must be dedicated on making payments, know your going to pay it off right before the date due believe me I have seen some failures. Its going to take time and there is no quick fix you just need to get started, you've waited long enough.

Make 2021 a credit building year, good luck.