Building Your Credit After Bankruptcy and/or Foreclosure – Part 2

Credit Crunch FICO

We are now at the second step of rebuilding credit following severe credit trauma. As promised last week, this column will focus on the best strategies for establishing new credit.

First, ignore any advice about getting a $300/500 secured credit card from any bank. Find a large enough credit union to serve your needs. Open a savings account. Save at least $1,000.00 ($2,500 to $5,000 is better). Secure this savings against a Visa or MasterCard with your credit union. Use no more than 30% of the balance within any month. The use of 10% is best. Keep in mind you must use the credit. You are proving you can responsibly manage credit. Your FICO rewards are higher credit scores which lead to lower cost home and auto loans, insurance and credit cards.

In searching for the credit union that is going to be a fit with you, do your homework. Call or stop in and ask about secured credit cards (this will lead you to someone that can answer or can get answers to your questions).

About credit union member bases: you need to belong to a group that offers credit union benefits. Most credit unions have a non-profit group that you can join for $5.00. Among the more traditional groups are family members or residents within a geographic area or church, school districts, utility companies and political parties.

Finally, when your account goes from being secured to unsecured make sure you will have the same account number reporting to the credit bureaus. You need to keep the good credit history you have created in the year or so of becoming established with your credit union.

Image Credit: myFICO

 Financially SpeakingJames Spray CCMB, CNE, FICO Pro | CO LMO 100008715 / NMLS 257365 | July 21, 2010 
 Notice: The information on this blog is opinion and information. While I have made every effort to link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct. This information is not legal advice and is for guidance only. You may use this information in whole and not in part providing you give full attribution to James Spray.

2 comments on “Building Your Credit After Bankruptcy and/or Foreclosure – Part 2

  1. […] for a FHA purchase money mortgage just two years after bankruptcy.  First, you need to establish new good credit and demonstrate you are using the new credit appropriately.  Next save up the down payment – […]


  2. […] your credit is to prove you are properly managing same. The best way to do this is to establish a significant deposit in your savings account with the credit union. A great benefit of a credit union is direct […]


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