Building credit from scratch or after bankruptcy

July 9, 2010 - PRLog -- Prepaid cards or loans are the first choice BUT make sure that they report to credit bureaus and not have outrages fees: For example: Applied Bank secured cards can be a choice. Also approach your personal bank for a secured card or loans.  

After a couple of months move to unsecured cards (or semi unsecured cards). At this stage you have some credit history and you want to apply for unsecured credit. It is not really wise to apply to just any credit card since at this stage you will be rejected by most card companies. An inquiry on your report is a negative so be careful.

Orchard bank is usually a good choice. Of course you would have to put up with some really high fees . Plus do not expect them, in time, to increase your credit dramatically or reduce your rate by much. The aim is to develop some positive credit history and then apply for OTHER credit cards.

Personally I would say apply for a First Premier card as soon as Orchard appears on your credit report.In terms of reporting and developing credit they are good enough BUT it is their ridiculous fees that I do not like. They have a tendency of charging fees even if you have a zero balance on your card. Just be aware of the various fees so you can budget for them. The last thing you want is to be late on payment while rebuilding credit.

After waiting another two months or so I would suggest, Capital one and Discover cards. At this point you should be at a stage that your credit is improving at a faster speed. You will have more choices and you might want to apply to some of the cards that you get offered in the mail. These days Chase is becoming more relaxed in its lending standards. So you might want to consider them also.

Have a good mix of credit: Secured loans (read article on “Personal Credit Repair Part 1” , for the “secured credit trick”), credit cards, installment loans etc.

Here is something that you might not know: If you apply for a years membership with Bally total fitness, the total amount of the years membership appears on your credit. You will keep paying the $10 to $30 per month membership fee and the balance is reduced. So it has an effect of an installment loan and that would certainly help build credit.

These days banks are surprisingly compromising IF they give you credit. May be it is the fear of having another defaulted credit client, I do not know, but use that to your advantage. I have seen situation were one calls up First Premier after using them for a couple of months and asking them to close the account. The reasons given were; high fees and too low a credit limit. After some negotiations First Premier CREDITED the card with enough money so the client would not have to pay the fees out of pocket. This happened with no strings attached, meaning that the card could be closed again after the allotted 6 months. Now I am not saying that this would happen to everyone. I only site this example to illustrate that negotiating with credit companies after you have made some payments can pay off.

Lastly do not forget the power of UCC filings. No need for approvals, no need for picking which place to apply, no need for negotiating and certainly no fees to pay (other than the minor filing fee). UCC should be a part of credit building and repair. As soon as you apply for a secured card or loan you should file UCCs and they work for business and personal credit.

Ucc filings are a form of public filings (filed at the state or County level) that are used to show the collateral that is secured against an agreement. Filings a UCC along with the agreement makes both these documents public knowledge. Credit and data collection agencies pick up this information and hence it appears on your credit. Using UCC filings the proper way can help tremendously in improving your credit.

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