One of the keys to building and maintaining high credit scores is to have a good mix of different types of credit accounts. One way to “diversify” your credit portfolio is to have two or three retail or gas cards (these cards are commonly referred to as “private label cards”). However, if you’ve had a major credit problem, such as a bankruptcy, this is not as easy as filling out an application at the store, handing it to the cashier, and expecting an automatic approval. Here’s why it has become more difficult than it used to be…there are very few independently owned retail store or gas cards anymore. This means that, despite the name of the store on the card, you are actually a customer of some other company. Fifteen years ago, most stores had their own credit departments and banks, and they made their “approve” or “deny” decisions in-house, which is why they had a reputation for being easier to get credit with. This has changed. Today your Best Buy ® , Macy’s, Gap, or Home Depot ® credit application is being looked at by people at a company that has nothing to do with DVD players, dress pants, or lumber. In fact, four major companies now issue most of the retail and gas credit cards available. The four companies are Citibank ® , GE ® Money Bank, HSBC ™ , and WFNNB.

Below is a list of the top 15 retail stores and the companies that issue their retail cards:

When you apply here……You’re really opening an account with…

1 Wal-Mart® GE® Money Bank 2 Home Depot® Citibank® 3 Target® Target National Bank 4 Lowe’s® GE Money Bank 5 Sears Citibank 6 Best Buy® HSBC™ 7 JC Penny® GE Money Bank 8 Federated Dept. Stores (Macy’s, Bloomingdale’s, May Dept. Stores – Marshall Fields, LS Ayres, etc.)

Citibank 9 Gap GE Money Bank 10 Staples® Citibank 11 Office Depot® Citibank 12 OfficeMax® HSBC 13 Kohl’s® Chase™ Bank 14 Meijer® GE Money Bank 15 The Limited, Inc. (Victoria’s Secret, Express, Bath and Body Works, etc.)

WFNNB

Just like retail cards, there are very few independent gasoline credit card issuers left. Citibank and GE Money Bank are the dominant lenders in this industry. Below is a list of the top 10 gas cards, and their issuers:

When you apply for this gas card……You’re really opening an account with…

1 ExxonMobil GE Money Bank 2 Shell Citibank 3 BPAmoco Citibank 4 Chevron Chevron Credit Bank 5 ConocoPhillips Citibank 6 Citgo® Citibank 7 Sunoco Citibank 8 Speedway Super America SSA, LLC 9 Valero DSRM National Bank 10 Marathon Marathon Petroleum Company, LLC

For the most part, the large retail card issuers have fairly conservative credit guidelines. In fact, based on our research, the only one of the “big four” that will not automatically deny an applicant with a bankruptcy is GE ® Money Bank. So, when you’re looking for a retail or gas card, it’s best to focus on the places that issue their own cards—that way the decision is being made by someone who actually works for the store. Remember, you have to be extremely careful when you apply for a retail card. You don’t want an unnecessary credit inquiry by applying for a retail card with a lender that is going to automatically deny you simply because you’ve filed bankruptcy. Before you do anything, you need to call the credit department of the store or gas station you would like to apply for credit with, and ask to speak to someone in the credit department. When you call, you may have to go through their automated services first. Be patient and persistent. When they ask for your information, enter the pound sign (#) or choose to speak to an operator. Keep entering # until they send you to a live operator. Then ask for the credit department. They may ask you for your credit card number. Just tell them, “I don’t have a card yet. I am thinking about applying for a credit card, but would like to ask some questions about your terms, first.” And remember—don’t settle for a low-level customer service representative. Their job is to try to get you to apply for their card and get you off the phone. The first person you speak with may not have all the information you need. Try to speak to a supervisor, or someone in the underwriting department. When you reach a person who knows what they are talking about, ask them these nine important questions. Don’t give out any personal information until you are absolutely sure you’re ready to apply. 1. Do you offer a retail credit card? 2. Does a third party issue the credit card? If so, who is it? (GE, Citi ® , HSBC ™ , WFNNB)? 3. How does a bankruptcy affect my chance for approval? Which credit reporting agency do you use to make your credit decisions? 5. What is the minimum credit score that you will approve? 6. What is the minimum credit score that you will approve for the lowest rate? 7. Do you report to all three national credit reporting agencies? 8. Can I apply for the card at the store? 9. Is there an appeal process if I am initially denied? After you get answers to all your questions, get a copy of the card’s “Terms and Disclosures,” and look at your options. The best cards are ones that will: 1. Not automatically deny you for a credit card because of one thing (bankruptcy, foreclosure, collection account, etc.) on you credit report 2. Offer you a comparable rate to other, similar cards (retail and gas cards typically have higher rates than other types of credit) 3. Report to all three national credit reporting agencies 4. Offer on-line bill pay 5. Regularly increase your credit limit if you handle your account responsibly (retail and gas credit cards typically have lower initial credit limits than other types of credit cards) 6. Offer their retail or gas credit through a revolving credit card issued by a b-a-n-k…not a b-a-n-c (“bancs” are nothing but finance companies masquerading as “banks”) 7. Offer low or no annual fee

According to our research, the Target ® store card and Marathon gas card meet all of the criteria above, making them excellent retail and gas credit cards. Below is a list of some of the features we found during our investigation: Target: • A discharged bankruptcy is not a sole factor in determining approval • Target generally requires the applicant to have two credit accounts in good standing for at least two years • Primarily reviews FICO ® credit scores from Experian • Reports to all three national credit reporting agencies Marathon Oil: • A discharged bankruptcy is not a sole factor in determining approval • FICO score requirements needed to get their regular card: 630-670 = $250 limit 670+ = $500 limit • FICO score requirements needed to get their premier card: 660+ and a good credit history = $1,000 limit • May work with customers nearing 630 • Primarily reviews FICO credit scores from Equifax • Reports to all three national credit reporting agencies The information we provide is as accurate as possible based on the information we received at the time of our research. However, results can’t be guaranteed as lending guidelines change frequently. Before applying for credit, always perform your own investigation first.

When I began my recovery from bankruptcy, I went through a short period when I thought that I would never be approved for credit again. I quickly found out that this kind of thinking will stall your recovery. Not only should you apply for new credit, if you do things the right way, you WILL be approved. Think about it. You can’t avoid credit forever, and if you want to make big purchases like a house or a car using credit, you have to show lenders that you have been able to be responsible since your bankruptcy. Avoidance is not recovery. Below is a list of the types of credit to apply for, in order, and a basic out – line of how to get approved for each: Secured Credit Cards You want to start with a few major secured credit cards (e.g., Visa ® , Master – Card ® ).

Secured cards are credit cards that are “secured” with a deposit that the lender holds in either a savings account or a CD. Your credit line will be the same amount as your deposit. This helps protect the lender in case you default, but more importantly, it gives you an opportunity to start saving. Having some type of savings account is important when you want to apply for bigger things, like a mortgage. There are a lot of companies offering secured cards out there, so you must be careful. Many of these lenders offer terrible terms with hidden fees and outrageous interest rates. According to my research the two best secured cards on the market are issued by National City Bank ® and Family Merchants Bank.

For more information about these credit card issuers, you can read the special insert: The Top Two Secured Credit Card Companies We Recommend. Start with secured cards. Pay on time for 24 months. Then apply for unsecured cards once your FICO ® scores reach 700.

Retail Cards (Store and Gas Cards) After you have established yourself with a couple secured cards, you should attempt to open one or two retail credit cards (also commonly known as store or gas cards). This can help you in a couple different ways. Having one or two store cards is just more evidence to other lenders that you are responsible enough to handle multiple credit accounts. But more importantly, when these types of cards report to the credit reporting agencies they can also help your credit scores (as long as you don’t max them out), because the FICO ® scoring model likes to see a healthy mix of different types of credit. Unfortunately, getting a store or gas card is not as simple as going up to any cashier and having the store manager review your application. Most retail cards are issued by one of four companies (Citibank ® , GE ® Money Bank, HSBC ™ , and WFNNB). For the most part, these large companies are unfriendly toward bankrupt applicants.

However there are a few retail cards that are easier to get if you have filed bankruptcy. According to our research, the Target ® store card and Marathon gas card offer the best programs for people with a bankruptcy on their credit reports. To learn more about retail cards, see the special insert: How to Get a Retail or Gas Card After Bankruptcy . Auto Loans Depending on your situation, you may need a car loan first. If you’ve had a bankruptcy, your best option is to work with a captive lender. These are lenders who finance just one manufacturer’s cars (e.g., Toyota Motor Credit, Honda Financial Services).

If you want to read more about the different types of lenders you can use to buy a car, refer to the special insert: How to Decide What Type of Lender to Use When Buying a Car

In addition, before you apply for an auto loan, interview any prospective lenders using your highest FICO ® Auto Industry Option SM score to determine which car dealer to work with. To learn more about how to use this strategy to get the upper hand on any car dealer, you can go to: www.autocreditscores.com . Mortgages In many cases, a mortgage is easier to get after bankruptcy than a credit card or auto loan. Mortgage lenders look at many different factors on your application, but there are a few key things you should focus on. The first is your middle FICO score. Mortgage lenders review all three of your credit scores, and then throw out your highest score and your lowest score.

They only care about your middle score. Before you start the mortgage process, you’ll need a middle FICO credit score of around 580. A middle FICO score of 600 gives you even better options in your rate, down payment, and fees. And of course, a middle score of 740 is the brass ring. Mortgage lenders will also look at your time after discharge when consid – ering your application. Some lenders will give you a loan one day out of bankruptcy, but with a higher interest rate, down payment, and fees. In most cases, your middle credit score will determine if you can mortgage a home less than two years after your discharge. Once you reach the two-year mark, your options increase dramatically (if you’ve had a foreclosure, you may have to wait an additional year). The next milestone is 48 months. Four years after your discharge you will qualify for conventional financing at the lowest rates and fees (however, there are ways to speed that up as well). The third major item mortgage lenders look for is debt-to-income ratio (DTI). Most lenders like to see a DTI below 50%.

The lower your DTI the better, especially if you have other factors (like a previous bankruptcy) affecting your approval. Ask your mortgage lender how your DTI affects your loan. Finally, mortgage lenders need to see that you’ve established new credit after bankruptcy, and that you’ve had at least 12 months of on-time payments. Typically, you’ll need at least two or three new credit accounts with good payment histories to be approved for a mortgage at the best terms.

Home Equity Loans

Home equity loans should primarily be used to increase the property value of your house, to invest in other property, or to grow an already successful business. The credit standards for home equity loans are often more strict than for a traditional mortgage.

Usually, lenders require 3 years after dis – charge and a middle FICO ® score in the mid-600s. When you’re applying for a home equity loan, it’s important to know what type of loan you are getting. If you are applying for a home equity line of credit instead of a regular home equity loan, you run the risk of lower – ing your credit scores.

If you want to learn the difference between a home equity loan and a home equity line of credit, and learn how to use these loans safely, you can read the special insert: How to Use a HELOC Without Hurting Your Credit Scores

Unsecured Credit Cards Once your FICO scores break 700 and you have at least 2 years from your discharge, you should be ready to apply for unsecured cards with prime lenders. And I’m not talking about the unsecured credit card offers you get in the mail right after your bankruptcy from lenders like Capital One and First Premier Bank. With scores in the 700s, you should be able to be approved by many credit card issuers. There are some larger banks, such as Citibank ® and Chase ™ ,that will not accept you with a bankruptcy on your credit reports, but there are more than enough other banks that will approve you. Good places to start are the local independent banks in your area.

Just make sure you interview your lenders to confirm that you will most likely be approved before you give them any information. Some lenders will still turn you down simply because a bankruptcy remains on your credit reports. Punks. I know this may look intimidating to you at first. But remember, you don’t have to get all of these types of credit at once. Start slow, and before you know it, you’ll have all the credit you need. Establishing these type of accounts combined with a long, on-time payment history will do miracles for your credit reports and credit scores.

Some people think that bankruptcy is the final chapter of their financial lives. This is not true. Bankruptcy can be a new beginning. Your recovery from bankruptcy is a process, just like the seasons of the year. Below are the steps that will take you through what I call the “7 Seasons Strategy” to bankruptcy recovery.

Step 1: Find the problems that led you into bankruptcy and fix them The first step of this strategy is to make some life changing decisions in how you handle your finances. Find the problems. Fix them. Remember, when you filed bankruptcy, it didn’t fix the problem. Bankruptcy simply gives you a fresh start. Think about it. There was something, maybe several things, that led to your bankruptcy. Maybe it was a poor investing decision, poor credit management, a job loss, a divorce, a major medical event that zapped your savings, a death in your family, no cash reserve to weather a storm, or some combination of the above. Of course nobody can avoid the unavoidable, but you can learn from your experiences and take steps to make sure you are protected the next time something unexpected happens.

Step 2: Go back into debt strategically Go back into debt using only mainstream lenders—no high-interest finance companies.

Strategic debt is when you borrow money from a lender to improve your credit rating. Don’t be afraid to go back into debt after your bankruptcy. It’s just like learning to ride a bike. When you fall off you have to get back on until you figure it out. The same concept applies here. Get back into debt cautiously and on your terms, but don’t avoid it. Stick with mainstream low-interest lenders and keep the amounts you start with manageable. As you get more comfortable, begin focusing on credit that gives you some sort of tax or net worth benefit, like a home or some other appreciating investment.

Step 3: Pay your bills early or on time Commit to paying your bills early or on time. This is the key for strong financial foundation. One of the last things a lender wants to see on your credit reports is one or more late payments. By paying early or on time you will guarantee that none of your lenders will ever report your account as being late. Late payments (and other negative credit items) account for 35% of your FICO ® credit scores. By paying early or on time you are guaranteeing that you will earn the most possible points in the “payment history” category. This is a must for anyone trying to enter the land of the 780s.

Step 4: Remove inaccurate information from your credit reports Work hard to remove any inaccurate, incomplete, misleading, unverifiable, or outdated information from your credit reports. This is nothing more than you exercising your rights as defined by federal law. The Fair Credit Reporting Act states that anything on your credit report that meets any of the above conditions must be removed. There are often inaccurate, incomplete, misleading, unverifiable, and out – dated items left on your credit reports after bankruptcy, and these can have a significant negative impact on your FICO scores.

Step 5: Manage your credit to increase your credit scores Make a goal to increase your FICO credit scores to 780 or above. This doesn’t happen overnight. Along the way to FICO credit scores of 780, you should create more attainable goals for yourself. Maybe 700, and when you reach 700, 720, etc.

It’s like training for a marathon. You don’t go out and run 26.2 miles your first day out. You work your way up to your ultimate goal. You don’t have to go from 550 to 800 in a week. But, you DO have to start right away. The sooner you start, the closer you will be to reaching your goal. Set a goal to increase your FICO ® scores by 50 points every 6 months until your scores are all above 780. Then change your strategy from an “improvement” goal to a “maintenance” goal.

Step 6: Learn to live off a percentage of your income Just look around you and see how much money you’re needlessly spending every month. Do you really need cable television and all the premium stations? If you smoke, how much money are you wasting on cigarettes? How many Starbucks’ $5 coffees are you drinking every week? Look around and you’ll be surprised at how you can cut back without affecting the quality of your life one bit. People generally adjust unconsciously to whatever their income is. If we make $100,000 a year we’ll adjust our spending to fit $100,000 a year. If we make only $45,000 a year, we’ll adjust to that amount. Take that one step further. If you’re a two-income family, live off of the higher of the two incomes. Take the lower of the two incomes and save every dime of it. After a few months you’ll naturally adjust to living off of one income and you’ll see a fast-growing savings account. If you are a one-income household, try to live off of 70% of that income and save 10%, invest 10%, and give 10% to charity. It will be difficult at first, but be persistent. The reward you will get from this will be worth more than anything else you could buy with the money. If you just invest the $5 a day you spend on coffee at 5%, after 40 years you could end up with $231,483!

Step 7: Strive to use credit as a convenience, not as a necessity The U.S. is the most “credit hungry” country in the world. It’s the only country on the globe that views credit as a right rather than a privilege. That’s not a good way to look at things—especially if you are bankrupt. You should use the credit system to your advantage. Use your credit to invest in real estate. Use your credit cards to buy things in a way that will improve your FICO ® credit scores. Don’t become a prisoner of the credit system (e.g., purchasing more than you can afford on credit and paying the minimum balance due each month—you’ll never get ahead that way). It’s hard to escape. Step 8: Consider paying back the debt you filed bankruptcy on This step is optional. Obviously, you don’t have to do this. But, once you’re fully recovered, look back at all the debts you discharged, and consider how you can pay them back, slowly. Some lenders won’t issue you credit again until you’ve paid them back. That means you can have FICO scores in the 800s but can’t get a credit card from some banks because you discharged a debt that you owed them many years ago. American Express ® does this. Again, this step is optional. If it makes you feel better then go for it.