Ok, So I got my mail today. Credit Card

[xoomer]

And inside my mail is a credit card. I got a Credit card, from the same company that I Bankrupted less than a year ago, I had to file for Bankruptcy because of medical issues, and the card was included. I'm glad that I got a Credit card so I can Start building my credit. But I'm trying to be responsible, And tips, As I do need to rebuild my credit- I'm not trying to be super credit boy.. but It would be nice to be able to buy a newer car if I wanted too, or a new computer on credit... So any advice on credit stuff would be great.

[pam]

If it is requiring you to pay an annual fee or a monthly service charge..get rid of it.

[NeuroTypical]

My rule of using credit cards - if I do not already have the money in the bank, I do not use the credit card.

I keep a list of my bank account balance, and how much money goes to things. $100 for food, $100 for bills, etc. Whenever I use my credit card, I'll go to my list and deduct $20 (or whatever) from food, and move it into bills. So when my credit card bill comes, the money is sitting right there ready to send.

We always pay our balance in full, every month. I've done this for more than a decade. I have almost perfect credit.

LM

[Tarnished]

We don't keep credit cards, maybe this is bad of us, maybe not. Instead we have worked on building up our credit through car payments and house payments. We just don't want to chance getting ourselves into the mess some people end up getting into with credit cards. I shred all credit card offers that come in the mail.

[trixie]

I'm about to pay off my credit cards for good, and rip them up forever.

[Just_A_Guy]

First, remember why they're giving you this card: it's because (assuming you filed Chapter 7) they know you can't file another bankruptcy for seven years, and they think you'll run up another balance and be stuck paying exorbitant interest rates. And if you don't keep current on them--they'll just get a garnishment action, and there's not a darned thing you can do about it.

Second: Your bankruptcy will be an enormous red-flag on your credit report for ten years. You will not have "good credit" during that time, no matter how wisely you use any new credit cards. Besides, "good credit" is not an end--it is a means to the end of borrowing money. And, other than to buy a house--why on earth would you want to do that? As part of your bankruptcy you filled out detailed balance sheets which should have demonstrated that, once your previous debts were discharged, you'd be making more than you'd be spending with at least a little bit left over. What's changed?

Edited January 21, 2010 by Just_A_Guy

[justaname]

First, remember why they're giving you this card: it's because (assuming you filed Chapter 7) they know you can't file another bankruptcy for seven years, and they think you'll run up another balance and be stuck paying exorbitant interest rates. And if you don't keep current on them--they'll just get a garnishment action, and there's not a darned thing you can do about it.

Second: Your bankruptcy will be an enormous red-flag on your credit report for ten years. You will not have "good credit" during that time, no matter how wisely you use any new credit cards. Besides, "good credit" is not an end--it is a means to the end of borrowing money. And, other than to buy a house--why on earth would you want to do that? As part of your bankruptcy you filled out detailed balance sheets which should have demonstrated that, once your previous debts were discharged, you'd be making more than you'd be spending with at least a little bit left over. What's changed?

Great post!

[HiJolly]

I'm about to pay off my credit cards for good, and rip them up forever.

We did that a year ago, though we did keep one VISA card for travel, etc.

We went all of last year, out of debt except for the mortgage. It was very nice. Then in November we totalled our '95 Honda Accord, and it didn't have comp so we bought a new used car and have a $115/mo. pmt on it now.

But it was very cool when the Credit Union lady pulled up our score -- her jaw dropped ---- 815! Yeesh! (I know, I'm boasting.... sorry)

HiJolly

[wokie]

Rather than getting a Credit Card with high interest I have a Visa debit card which I can use the same as a credit card but I use my own money.

[nbblood]

Credit cards are a very important part of building a solid credit history. Personally, I would never keep a credit card that had an annual fee or service charge, as Pam said. I also would never keep a credit card that charged double-digit interest.

However, that said, having filed bankruptcy, you may not have the convenience of those options. You may have to accept less favorable terms to build your credit back up initially, then upgrade to more favorable offers as your credit builds.

As I stated earlier, having a credit card is important in building a credit history. People that think that having no credit cards is a better options are only hurting themselves on their credit reports. That's right, hurting themselves. A person that pays cash for everything will have a very poor credit rating because of no history. Similarly, one that only relies on certain types of credit, i.e., home mortgage, auto loan, etc., is limiting the power of their credit rating by not building additional credit references, i.e., credit cards.

Like it or not, credit cards are one of the most heavily weighted criteria for building a credit rating. Not owning and using them hurts your credit rating. Yes, that's right, hurts your credit rating......even though you're being financially responsible enough that you don't need them......I know, irony, irony......

Anyway, what's important for your credit rating is the percentage of credit used on any account. Do what you can to stay below 20% of your available credit ALWAYS. Also, making payments on-time and even paying off the credit card reflect favorably on your report. A card sitting in your wallet unused, on the other hand, will be a detriment to your report.

Soooooooo.........the best way to use a card and build your credit rating is what has been implied before. HAVE THE CASH BEFORE YOU SPEND WITH YOUR CARD.........PAY THE CARD OFF IMMEDIATELY.....

Most cards have a grace period where you don't pay interest. This method keeps you from paying interest, yet reflects favorable credit positions on your history.

This takes DISCIPLINE. If you use this discipline, your credit rating will recover.....probably more rapidly than you think. If you maintain an 80% balance and make minimum payments, not so much.

Also, I would continually look for better and better offers. Upgrade when you can. Lower your interest. Eliminate yearly dues/fees. BTW almost any credit card will waive an annual fee if you call them to cancel the credit card and tell them the reason you're not keeping it is because of the annual fee. They'll waive it to keep you a customer. Do that with any card that charges an annual fee.

Limit the number of cards you hold. Too many cards, even if they all have no balance does not help your rating and in some cases hurts it. Limit to 2-3 at the most. One is just fine.

Finally, to keep yourself disciplined in your use. Find specific purchases that you will use the card for. I recommend one a month for any card you hold. Take your card with you for that purchase. Don't keep the card in your wallet. Keep it in a drawer at home and use it only for the purchases you PLAN. That helps keep discipline.

Keep in mind the Church's message of staying out of debt. It is wise council. However you can use the cards and still stay out of debt while simultaneously building your credit rating for potential of that big purchase, i.e., home mortgage. If you only use cash for everything you are severely limiting your potential for a home loan, even one that is easily within your budget. So use wisely.

Edited January 28, 2010 by nbblood

[WillowTheWhisp]

My advice on credit? - Don't.

[nbblood]

My advice on credit? - Don't.

I suppose if you can pay cash for your home and your car(s) then this is fine. Otherwise it's pretty poor advice. Those that avoid building a credit reputation or credit rating will suffer.....severely......upon trying to get approved for a mortgage. It also severely limits what they can qualify for and what percentage rates will be offered.

There is a difference between using credit and getting in debt. The challenge is recognizing the difference. It is very possible to use credit wisely and still stay out of debt. That is how you build a credit rating. It can save you literally thousands of dollars on a home mortgage. Most people cannot pay cash for their homes. Of course you could rent forever, I suppose. And if you don't need a car or you pay cash.....

The bottom line is that it is wise to establish a good credit rating without creating debt. Maybe you'll never need it. Then again, maybe you will.

[WillowTheWhisp]

I can see your point when you put it like that but I was just thinking of the dangers of getting into debt again for someone who has already been through bankruptcy.Maybe it is easier to move on again in the US.It seems like you can't get credot for a long time here if you are bankruptand have to pay off debts.

[ignaciagirl]

I'm about to pay off my credit cards for good, and rip them up forever.

This is where I'd like to be one day. It's tough when you're mired down trying to survive.