My plan on rebuilding my credit after discharged in bankruptcy. Need your opinions.?

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I just got discharged on December 2008 and I’m planning to apply for 2 credit cards and a car loan ( revolving and installment) to rebuild my credit starting now ( January ). My target time frame is 2 years for rebuilding.

First, my mom owns a car free of liens and it is fully paid. The car’s worth is around 10k. I’m planning to make a loan out of it as a collateral. My mother agreed to co-sign me if needed. I’m only going to take a $ 3000.00 dollar loan for 2-year term.

Second, on the same bank, I will also try to obtain 1 credit card from them for $ 1000.00 ( wish me luck! ). Use it for gas, food and other necessities which won’t exceed $ 300.00 or 30% and pay it off every month before the due date.

I would like to apply for loans stated above from my bank which I have direct deposit. I think it will also help if I sign up for a savings account and automatic payment.

Third, If I can get the $ 3000 loan from the vehicle, I would like to take $ 500 and have a secured credit card from other institution, and use its 30% and pay it off on time as well.

So in a nutshell, I hope I can get a car loan, 1 unsecured credit card and 1 secured credit card.

Here are my questions:

Will the bank able to finance me for 2 years only since my target is 2 years also for rebuilding? or do they need at least 3 to 4 year terms?

When is the safest time to apply for loans after the bankruptcy discharge?

I’m also thinking of going to school and will apply for student loan. Will a student loan still in defferment will help me gain credit score? I don’t think so right?

What other types of loans would you suggest, other than a mortgage to boost up my score within 2 years?

4 Comments
  1. Reply
    Ed Atun
    May 2, 2011 at 3:06 am

    41% of all people who declare bankruptcy are back in financial trouble within 1 year of the BK. With those odds, your plan seems overly optimistic. Drive a car with no loan. Otherwise, take the bus or bicycle. No credit cards at all; pay cash or don’t buy it.
    But if you are absolutely certain that you will not be a “statistic”, go ahead with your plan. The bank will offer 2,3,4 year terms. Safest time for loans is 10 years after the bankruptcy. Student loan will help build credit score if paid on time..

  2. Reply
    Yuj W
    May 2, 2011 at 4:01 am
  3. Reply
    andy
    May 2, 2011 at 4:59 am

    Actually, I would start out with just one bank credit card with a low limit that you use every now and again to keep it active. You do not have to use a credit card every month for it to help your credit score. Also with a bankruptcy and you wanting to go to school, I would not take on a lot of debt or else you will end up where you were. Remember that your student loans will have to be repaid once you get out of school and that will help your credit score a lot more than doing what you are talking about.

  4. Reply
    SPIFIMAN1
    May 2, 2011 at 5:09 am

    Now from someone that’s been through exactly what you described.

    My chapter 7 discharged in March of 2001 I had reaffirmed on a existing loan with Ford so I already had the installment, I got 2 credit cards 1 from Orchard Bank and 1 from First Premier and used them for every day things and paid them off in full before the due dates.

    After 12-months I bought a new car with no money down at 3.9% through Ford and got better credit cards.

    After another 12-months I bought a new home again with no money down and a 6.5% fixed rate.

    Now all of my scores are well over 800 because of all of these open and paid as agreed accounts after my discharge.

    As long as you can pay your credit cards off in full every month and not go back into debt I think you have a great plan.

    Good luck.

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