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Trouble Getting Credit? Try Your Local Bank First.


The link between the recession and credit cards is undeniable. While credit card use by itself is a number of links down the chain from the one that broke Wall Street's hold on the economy, the underlying theme of easy credit and its impact on the American consumer remains a prevalent factor in our ongoing financial struggle.

In the majority of the posts about credit cards here on "Bankruptcy & Your Passage Into & Out of Debt," you will read about how substantial a role credit cards play in bankruptcy. There is simply no denying it. Thankfully, the era of easy credit now seems to be fading into the sunset, evidenced by the approach global banks are starting to adapt relative to issuing credit cards.

In light of a rapid increase in account charge-offs and missed payments, banks will start factoring credit decisions based on your level of current business with them. In other words, if you already have a savings or checking account and how much you keep in each.

This approach to issuing credit was at one time the primary factor for many banks, especially local community banks. After all, it simply made sense. If you are a good customer and demonstrated a track record of fiscal responsibility, your banker, not a computer, could make the determination on whether or not to issue you a loan or line of credit. Often, a handshake and a word of promise was more important than a credit score and a business-school derived mathematical model.

Unfortunately, the small-town banker, whom you may know from your church pew or the little league baseball sideline, has been pushed aside by call center operators and glossy direct mail pieces with attractive credit card offers boasting "hurry-up and join" headlines just sure to offer all the rewards and prestige your credit rating says you deserve. Until you miss a payment. Then you get kicked out of the club.

But the club rules are changing for the better. In a USA Today article, an executive with an investment bank that advises the credit card industry said, "In today's environment, not all the risk models are working..." In support, the leader of a small community institution in Upstate New York, Cattaraugus County Bank, said his bank has never used a "cookie-cutter" method of determining credit worthiness.

For those looking to rebuild after bankruptcy, your very physical presence can make a big difference in the eyes of your local banker. Literally, many small banks want to know where you live and how they can reach you if there is a problem with an account. If you have a job, a similar zip code and a working phone, it can help you become a better customer to a local bank. Keep in mind, your credit history will play a role. However, you are not going to feel like another person on hold or the source of another potential commission.

To a local bank, your deposits are looked upon as a sign of trust in their ability to protect and build your money. In return, they are willing to hear your explanations for why you need credit and how you plan to use it. Additionally, you'll find answers to your questions quickly, without the need for a vexing automated option tree that routes calls about account balances to India and problems with billing statements to Argentina. Instead, local banks offer comfort, understanding and a solid business model.

For rebuilding credit after bankruptcy, start with a bank in your own neighborhood.

Drowning in credit card debt? Call the Law Offices of John T. Orcutt to set up a free initial debt consultation. +1-919-646-2654.

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