Building Credit After a Bankruptcy

In 2010, over 1.5 million people filed bankruptcy, and 2011 is expected to bring much of the same. Filing bankruptcy is one of the most damaging things to a credit score, potentially dropping your score by 150 points or more, reducing your credit creditworthiness and costing you more in increased finance charges and interest rates. Though bankruptcy remains on your credit report for 7 to 10 years, there are steps you can take to start turning your credit around in 12-18 months.


Check your credit report: This is probably the last thing you want to do, but it's important to know exactly your current credit status, while also confirming all information is correct. The longer incorrect information stays on your credit report the longer it could possibly negatively affect your credit score.


Go to www.annualcreditreport.com and pull your credit report. This free report will not contain a credit score, but you just want to make sure everything that should have been discharged in your bankruptcy shows a zero balance. If it doesn't, contact those creditors and the credit bureau to make sure the information gets updated.


Make on-time payments to remaining debts: Many people mistakenly believe that a bankruptcy will wipe out all debts, but some, such as student loans, child support and, in many cases, mortgages will not be discharged. By keeping on top of payments on those remaining loans, you'll receive a credit boost for paying your bills over time.


Get a Secured Credit Card: Secured credit cards let you take baby steps back into the credit game. To offset the card issuer's risk, secured cards require a deposit that serves as your credit line, so if you put down $1,000, you'll have $1,000 in credit available. Apply for a secured credit card through a local bank or credit union, but make sure you do your research first. Many secured credit cards have extremely high fees, and not all report to the bureaus. Make sure the card you are using has the lowest APR, low fees and most importantly reports to the credit bureaus.


Obtain a small loan with your bank or credit union: Many banks and credit unions will allow you to take out a personal installment loan based on the money in your savings account. FICO likes to see a "healthy mix" of credit lines, such as both revolving and installment. Getting an installment loan that is secured by your savings will allow you to start building credit through another resource other than the secured credit card. Remember to ask your bank or credit union if this loan will be reported to all 3 bureaus. The key is to build credit and increase your credit score. If the hard work you are doing is not being reported, you will not see any of the benefit.


And lastly, after several months of responsibly using your secured credit card, (paying on time, keeping balances low, etc) and making your monthly installments on your secured loan on time, you should be able to get approved for an unsecured credit card. Apply for a small gas card, or a department store card, as these are typically easier to obtain.


Once you've shown your ability to pay on time and your credit score has raised accordingly, ask the card issuer to lower your rate, or apply for a card with better terms. There's no one-size-fits-all approach to rebuilding credit after bankruptcy, but with consistent financial discipline and a little patience, you will get easier access to credit again.

From Data Facts

You can reach me at 615-777-4663 or via email at George.Margrave@MIGonline.com

What about the scams and teasers?

It is no accident that many computers put any message about mortgages in the spam filter. That is because there are an unbelievable number of bogus emails sent out with outright lies as well as rates way below what can be delivered. Have you seen the one about 2% fixed rates? Well as low as the rates are, there is always someone willing to lie about how low they can quote you. But they don’t tell you what kind of loan cost is involved. As always when something seems too good to be true, it probably is. Many times they call an ARM that is fixed for three years fixed. That is the kind of stuff that caused some of the problems the country now is going through.

You don’t even have to read your e-mail. The internet is full of schemes to separate you from your money. And even snail mail still delivers its share of problems. I think my personal favorite is the “no brainer” ad on the radio. Oh well I am always willing to give you an honest opinion, any time you want to check something.

I can be reached at 615-777-4663 or via email at George.Margrave@migonline.com.

Which buyers can benefit from today's record low interest rates?

All of them-- that is who. Since this country started keeping records these are the lowest interest rates that we in the housing industry have ever seen. Yes it is a little hassle to get qualified, but if the buyer will work with us, we can usually get it done. And you don't have to have a lot of money contrary to what you read. With a little info we can give most anyone a quick analysis of what size home they can buy. Yes you can wait until the economy is better. But if your job is secure now is the time. The price and the payment will never be better in my opinion.

I can be reached at 615-777-4663 or via email at George.Margrave@migonline.com .

Lowest Rates Ever! (No really)

If you have been keeping up you know we have the lowest rates since I can remember (I think they are the lowest since the records were kept.) You have been hearing radio ads about this for the last two or three years, but now it is really true. How can it benefit someone who wants to refinance?


If you have an FHA loan at about 5.75% or higher, it would probably benefit you to lower your rate on another 30 year loan in the 3’s or low 4’s. For a little more we can pay your closing cost. If you can go to 15 year, it will probably still increase your payment but can make a huge difference in your future equity position. The kicker with FHA is the MIP payments eat up some of your interest savings. If you don’t have equity, we can do a streamline loan with no appraisal, but you have to pay the closing cost out of pocket, or we as lender might be able to pay it for you. Call me for details.

If you have a conventional loan, we are most likely going to have to have an appraisal. There will have to be enough equity to finance closing cost or you could pay them or once again we as lender may be able to do it. Once again call or email your questions. Just click on reply.

The bigger the loan the more savings you get. Also once again don’t forget the 10 or 15 year loans if you can handle the bigger payment.

I can be reached at 615-777-4663 or via email at George.Margrave@migonline.com .