Attended the Credit After Bankruptcy seminar on Saturday in Costa Mesa, CA. It was very interesting and I learned a great deal. Some of the stuff I had learned on CreditNet, but I learned even more at the seminar. I was also amazed by the number of folks (350+) at the morning session and how many of them appeared to be middle and upper class folks. Not my image of the "deadbeats of the world." At first I kept my head down and didn't say much to my neighbors. Then Stephen had us get up and introduce ourselves to at least three people and tell them we had declared bankruptcy. Eeeeeeeeeeeew...tell people I'm a deadbeat....I think not!! Well I did and I actually felt better afterwards. Later on during the break I talked to a few folks and learned their stories and I realized that anyone can make a mistake. The key is to learn from the mistake and move forward. Stephen's big push was to get us to improve our credit scores ASAP. Our goal should be to strategically go back into debt and then to strive to use credit as a convenience and not a necessity. To increase our FICO, Stephen said we should: 1. Forget about living on a cash only basis 2. Minimize credit inquiries 3. Pay bills early 4. Pay off revolving credit cards each month 5. Never close a credit account 5. Don't switch credit cards every few months to get the best rate 7. Keep the oldest credit account on your credit report 8. Never have more than 2 major bank cards in your own name 9. Never use over 50% of each of your revolving credit limits 10. Stay away from finance companies (Household, Beneficial, Americredit)--only use mainstream lenders We also learned that getting a mortgage after bankruptcy is possible. 24 is the magic number, but it is possible after 12 months. At 24 months, a person with a bk can qualify for a loan at the same interest rate as someone who hasn't declared bk. As for auto loans, Stephen said we should interview the finance manager and get approved for a loan BEFORE shopping for a car. He said to make sure the loan is through captive financing (i.e. Ford Motor Credit, Toyota, Honda, GMAC) or a bank (Chase, Bank of America, Wells Fargo). He said be prepared to walk away from a car deal and RUN not walk if the finance manager gets you a loan from AmeriCredit, Household Credit or American General. Granted Stephen really pushed Ford Motor Credit because he had taken the time to call several dealers in the area and Ford was the only one who was willing to work with people with bk. In fact he gave us the name of the Ford dealership who he felt would be the most helpful to us. I have to admit the idea of buying from Ford is not something I would have considered in this lifetime. I do have a bias against American cars. I currently drive a Mazda and I've driven Hondas, Nissans and Toyotas. However I'm willing to keep an open mind and I actually like the looks of the Ford Focus hatchback (however I think the Taurus is downright ugly). Stephen also shared the philosophy of Rich vs Poor. He said the Rich invest their money and spend the rest while the Poor spend their money and invest the rest. His basic theme was we should make an effort to give 10% of income to charity, 10% should be saved, 10% should be invested and we should live on 70% of our income. When I heard that I gulped and thought I could never ever do that in this lifetime. However Stephen pointed out it was the habit of giving and saving that counts not the amount. He said that it took him six years to get to living off 70% of his income. After that, I thought well maybe I could start off small and work my way up. Stephen did recommend the book "Rich Dad Poor Dad" by Robert Kiyosaki that would better explain his ideas. More Stephen recommendations.... Use a professional to get items deleted off your credit reports. He recommends using Bradley Ross - (317) 915-2466 or email: jdawson@bradleyross.org in Indiana. It normally costs $200 to start and $115/month to use them, however if you attend the Credit After Bankruptcy seminar, the $200 is waived and it's only $60/month. Once my bk is discharged and my cash flow is improved I plan to use them. Stephen showed the audience his credit reports before and after Bradley Ross started working on them and he got his bankruptcy deleted and knocked two of his CR scores over 800. As for credit cards....Stephen said to stay away from Capital One and Providian. He felt they treated folks shabbily before bankruptcy and worse afterwards. He normally recommends two companies for secured cards, but he learned one was being sold to Household. Now he only recommends First Consumer National Bank. I sent him an email asking him if he still recommends FCNB since they are up for sale and how does he feel about Orchard and American Pacific Bank...I'm waiting for his response. Overall I'm very glad I went to the seminar and would highly recommend it. He's a very good speaker with a great sense of humor. You can check out his website: http://www.afterbankruptcy.com/ to check the list for future dates. I believe you can attend free of charge if you've declared bankruptcy. They will either send an invitation or I had emailed them to add me to their list.
It looks like he gives valid advice, but I was wondering about the reasons behind a couple things... Why only 2 Major Credit Cards? Paying bills early... besides better chances of not having delays in payment occur, how does this increase your score? And about staying away from finance companies, and subprime credit cards... of course this is the better thing to do, but how does he suggest getting prime lenders to approve you when you are just beginning your credit clean up process? Do you just wait until its all clean, and hope you get a prime at that point? And what if you can not get it 100% clean?
It's been posted here that FICO regards two major credit cards, one retail card and one installment loan as the optimal mix. As for paying bills early, don't know what to say. Maybe it's art of paying on time and with money on hand as oppose to waiting for the last minute and finding that you alreadly spend the funds on beer. I agree that if not for sub-prime lenders like Providian and Cap 1 how does one go out and obtain credit. I personally do not have a problem with either company. They have given me over 11k in credit since my bk-13. Funny no comments on Cross Country and that elk? I agree with looking for auto finance with Ford and those type. But I opt to buy a used car instead and funnel my energy towards a home mortgage instead. I do not agree in using a repair service of any type. As I was a former user of Junum. Also makes you wonder how much of a commission is being kicked back. Information on how to build your credit can be found here if you devote time to read and ask questions. Save your money and invest in yourself. Best regards, Mirage
the reason you stay away from finance companies for installment loans is that the tradeline actually REDUCES not increases your credit score. I've directly had Fair Isaac confirm this. frankly, the other major reason is the interest rate. The captive lenders have more incentive to finance you and at a good rate (sells their own products). By the way, I think you can finance a Mazda with Ford Credit (same company now). I would now disagree with the comment on Cap1. We have proven strageties to get terms and locs increased. Providian stays more predatory on interest rates once you move your scores midlevel... so they're an iffy recommendation even by me, and I've had 3 of their cards. I think his credit repair company seems ok if you want to hire a company to help you. Of course, be aware he owns it... All in all, he has great recommendations for rebuilding credit, and his employees are very nice.
NOW you guys tell me about staying away from Household and Americredit (or any finance company) for an installment loan!! No one advised me to avoid these places when I was actively looking for financing. I have a question - what can you do to help your score if you've already used these guys for a loan? I used Household for a car (I've since paid it off) and I am currently financed for another car by Americredit. I was thinking about using the nutcase letter on Household to get them to remove the entire entry- would that work? I guess that's two questions! Thanks -- kjoe
9. Never use over 50% of each of your revolving credit limits --------------------------------------------------------------------------------- ILLOGICAL when it's @ 0.00% or 1.90%... Just my opinion.
5. Never close a credit account ----------------------------------------------------------------------------- I kept on getting "TOO MUCH AVAILABLE CREDIT"...(NOT A REAL F.I.C.O. CODE)...so I closed a bunch of accounts, and it BIT ME IN THE BUTT!!! I have not closed ANYTHING since our 3 FIRST USA cards...$72,000+
I think that the Finance company hurting the score is a bit more complex... suppose someone has 25 chargeoffs, no positive accounts, and goes out and gets a car with a finance company. I really do not believe that this will lower their score, sure if you have clean credit or pretty good credit it will lower it, but for someone with very bad credit, or no credit, I do not think it would hurt, also there is the fact that FICO states that an optimum mix includes an installment loan, so how many points do you lose not having the finance comapny vs. having it on your report? Also I think on a manual consideration, a prime lender will look at a past auto loan with perfect history as a plus, this is my opinion, but I believe in most cases they rather see that ,than no prior installment history. But of course if you can stay away from the finance company, do it.
One thing Stephen pointed out that I didn't know or realize is that the credit scores that you get from Experian, TU and Equifax aren't worth the paper they're written on. The only true way to get FICO scores for those agencies is to get it from a lender i.e. a mortgage company. Not only do you get the scores, but you get the reason codes.
When I bought my house in 1994, my mortgage broker told me to pay off as many of my cards as possible or get them below the 50% level. High debt ratios and/or utilization are deal killers and will hurt your FICO badly. Besides as Stephen pointed out...credit should be a convenience not a necessity. Having a credit card makes it easier to rent cars, buy items over the phone/internet or when you're traveling. However when you have to start spreading the payments out over months...then it's a problem. Low interest rates are great, but they don't last forever. As Stephen said in the seminar...everyone who has bad credit or filed for bankruptcy needs to identify the problem that led to that point and fix it. Yes I left a well paying job and took a 50% cut in pay. However I used credit irresponsibly. I figured since my interest rates were low...9.9% on Cap One and 7.9% on Aria and I was making more than minimum payments I wasn't doing half bad. I just made the mistake of starting to charge everything and failing to pay off my credit cards every month. That was followed by my impulse car shopping. Buying a new car every year for three years because I got tired of the old one or found something I disliked about it. Ahhhhhhhhhh the wisdom of hindsight.
I went to his website, he is not going to be visiting any where near me, I read some testimonials on there, can you share with me what the secret is to be able to walk into a dealership and get a good rate right after BK, and some one else said they got a unsecured CC right after the seminar by applying where he said they should apply, what cards does he recommend? A few testimonials showed instant success, whats the secret to that? All info would be greatly appreciated, thanks
I Did but some how I missed the blunder. You arent going to hang me like the CRAs would for making a mistake are you ?
This a great thread for us BKer's. I think the 2 credit card recommendation is for people with very good credit and no negatives. I will be in this position in 5 years. Somebody else pointed out that if you have a bunch of negatives on your reports then you need a lot of recent positives. Cap 1 and Providian gave me credit when no one else would. Mazda and Ford are the same company. Toyota just gave me a good rate on my Camry purchase and I have 6 cards. In 5 years, I will have 2 or 3 prime cards ( one will be Cap 1 because of the age effect), 2 retail cards and probably a new home and car. So I hope.
