This is not a sponsored post. All information and data is from my opinion and experience.
I filed for bankruptcy last year and was officially discharged in October 2011. It was a heartbreaking decision but was something that I needed to do to protect myself from an unwanted foreclosure. Doing a lot of research on the repercussions of the bankruptcy and foreclosure on my credit, I knew I was in for some pain points in my life in terms of getting new credit, loans, etc. for years to come. Even applying for a new apartment application hurts the pit of my stomach as I wait to be rejected due to my credit history.
What I think is the most frustrating is that I have great employment history, being at my company for over 11 years, I make a decent amount of money and now have limited debt (just my car and student loans) so I have a great debt to credit ratio. You’d think with all that positivity, that my chances of being granted some form of loan or credit would be good, but when you have a bankruptcy in your recent history, that’s just not the case. The good news is that I no longer have credit card debt or unsecured loans. I live on the cash I receive from my paychecks and am able to put a good amount of that in savings every month.
The bad news is that I kind of need a new car. (I’ll explain “kind of” in a little bit.) And because of that, I’m unable to qualify for a loan for at least another 14 months. Just to try and start the process, I contacted a local credit union that was running an awesome APR rate for new car loans…just to see what they would say. After running my credit (and I even slapped JP on the application, hoping that would help) an answer of “No” came 3 business days later…mostly due to the bankruptcy on my credit history. My credit score rose a bit from my October 2011 discharge from 597 to 623 so that shows some good progress, but even the credit union said I would need to be two years out from the discharge and prove that I established new and positive credit history. The only way to do that right now is to pay a lending institution to give me a credit card. Check out Option #4 here. It’s called a secured credit card where you give the lending institution your money (essentially proof that you will be able to pay back debt because it’s a form of a deposit), and then can build your credit from there. Downfall is that you have to front your own money before being able to use “theirs”.
Here’s another article on the “best” cards out there to rebuild your credit. And by “best” we’re talking high interest rates, high annual fees and some of your own money up-front. The good news is that they will report your spending habits so if you stay on top of your credit card, your positive spending history will get reported to help boost your credit score and show other lenders that you’ve changed your spending ways which could help you qualify for a loan in the future, especially if you’re looking to get a home loan. The best home loans for those that have went through bankruptcy or foreclosure are FHA loans which can help people with low income or terrible credit get a home loan within 2-3 years of their bankruptcy or foreclosure, with a minimum down payment.
So that’s the jist of what I’ve been dealing with … the next part will be the Pro-Con-Pro of buying a new car and keeping the old, followed by “Was I able to get a new car?” and the outcome of everything! Stay tuned!!