Rebuilding

Let the credit rebuilding begin

It’s been nearly three months since our Chapter 7 bankruptcy was discharged, and we’re beginning the slow process of rebuilding our credit. Dave Ramsey maintains that you don’t need a credit score because you shouldn’t use credit for anything, which is pretty easy to say when you’re as wealthy as he is. We agree with that in principle and are committed to keeping as low a level of debt as possible. But we also know that for regular people in real life, large purchases such as homes require loans…which in turn require a reasonable credit score. With that in mind, credit rebuilding is a necessary evil. Here are the baby steps we’ve taken so far:

  • Resuming payments on Tony’s truck. Since he is still unemployed, I’m making the payments. If this is reported (haven’t checked yet), this will help his credit. There’s only a year or so left on the loan.
  • Resuming payments on my student loans. The vast majority of the balance ($65k) is still somewhere in Student Loan Limbo; according to Sallie Mae I only owe a grand total of $300. I could pay this off in full and be done with it, but I suspect that making small, regular payments for a year will help improve my credit score more. I also want to get back in the groove of making regular payments, because I expect the rest of my loan balance to materialize at some point and I’ll need to make payments on that.
  • Cleaning up my credit report. I’ve requested free copies from all three credit bureaus and reviewed them with a fine-tooth comb. Any accounts included in the bankruptcy should have a status of “Included in Chapter 7” or “IIB” and a zero balance, and no negative payment history. With just a few exceptions, everything on my reports was correct. I have disputed the incorrect accounts (a couple of them hadn’t been updated recently and still said Chapter 13; another said “Paid after collections”) and these disputes are in progress. Tony still needs to do this.
  • Awaiting foreclosure. Since our discharge, every month the foreclosure sale gets scheduled and then rescheduled to the next month. When we enquired, the lender’s attorney was not able to tell us why. I suspect it’s the foreclosure backlog, either with the courts or the attorney. We haven’t lived in that house for almost a year now, so I just want to get it over and done so the foreclosure aging process can begin.
  • Considering a new car loan. After losing my car in the bankruptcy, we’ve had only one car between the two of us, and it’s not impossible but it is a giant pain in the ass. I’ve considered buying a beater for cash, but…I just don’t want to. I have spent the better part of my adulthood driving shitbox cars because they were all I could afford. Now that I can afford a dependable car, I don’t want to drive a shitbox any more. Call me a car snob or a princess or whatever, I don’t care. I am really enjoying not having a car payment, but a smallish car loan for a reliable (not fancy) used car would help re-establish my credit.
  • Paying the rent 2 weeks early. Instead of anxiously awaiting my paycheck at the end of the month to be sure the rent check clears, I know that it’s all taken care of right when it’s due. This is a luxury we haven’t had in several years. This isn’t exactly credit rebuilding, but it helps my peace of mind, and if we need a rental reference from this landlord, our payment history will be impeccable.

So…this is just the beginning of the credit rebuilding adventure. More to come soon!

 

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