rebuilding credit

April 3rd, 2006 by Questions

Hello All
I chose to use a counselling service when I was having financial trouble two years ago. I have two years left until I am debt free. I have paid 30,000 thus for a debt that was originally 60,000 dollars. I had to destroy my credit cards and agree not to apply for any more . The service consolidated all my individual accounts into one payment per month. The interest was suspended on my accounts or a very small percentage was used . Interest charges is one of the reasons I got into this trouble. I want to start rebuilding my credit now. I would have to ask for permission to do so.

I am interested in buying a new car or a house. I don’t want to apply for credit cards. I likely won’t ever apply for credit cards again in my life. Would I have any chance of getting approved for a house or a car? I would seek permission from my counsellor first. My father told me that he would loan me $ 9000, but would not co-sign for me. I Have no one else to co-sign for me. I earn $4200 a month net. My expenses and the payment I make to tne counselling service accounts for only half of what I take home . I was not earning this amount two years ago (I was promoted last year and it doubled my salary. I see advertisements on TV that everyone is approved for a car . They would approve people who had gone bankrupt or were still in the bankruptcy process. Do you think i would be approved for a new car with a 9000 thousand down payment? Maybe they won’t loan me money until my past debt is paid in full .


One Response to “rebuilding credit”

, A licensed trustee said:

This really is a conversation that you should have with your financial counselor. Since you’ve taken the time to write, I will offer a few comments/suggestions:

1) The ads may say that everyone is approved for a loan – what they don’t tell you is the interest rate you will be charged. New car loans from a dealer can run anywhere from 0% to 8% depending on promotions. New car loans from a bank may run between 5% to 9%. Finance companies 11% to 18%. High risk lenders up to 32%.

If you don’t qualify for dealer financing or at a bank then you should hold-off on the purchase until you do. All of the other lenders are charging you a premium (extra) to lend you money.

2) Have you given any thought to increasing your payment to your credit counselor? If you have extra money available it might make more sense to pay off your program early. This would eliminate the payment (thereby freeing up even more cash to either save or to use to make a car payment with) and clear your old credit problems from your record.

See your counselor and together you can decide what makes the most sense for you.

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