A year after declaring bankruptcy and moving with her daughter back into her parents’ home, Patricia Hunnington is about to get a degree in nursing. As she starts out in a new career, she also wants to begin a new life—one built on a solid financial base. Patricia will be starting out as a full-time nurse at a salary of $52,000 a year, and she plans to continue working at a second (part-time) nursing job with an annual income of $10,500. She’ll be paying back $24,000 in bankruptcy debts and wants to be able to move into an apartment within a year and then buy a condo or house in 5 years.
Patricia won’t have to pay rent for the time she lives with her parents. She also will have child care at no cost, which will continue after she and her daughter are able to move out on their own. While the living arrangement with her parents is great financially, the accommodations are “tight” and Patricia’s work hours interfere with her parents’ routines. Everyone agrees that one more year of this is about all the family can take. However, before Patricia is able to make a move—even into a rented apartment—
she’ll have to reestablish credit over and above paying off her bankruptcy debts. To rent the kind of place she’d like, she needs to have a good credit record for a year; to buy a home, she must sustain that credit standing for at least 3 to 5 years.

Critical Thinking Questions 

1. In addition to opening checking and savings accounts, what else might Patricia do to begin establishing credit with a bank? 

2. Although Patricia is unlikely to be able to obtain a major bank credit card for at least a year, how might she begin establishing credit with local merchants? 

3. What’s one way she might be able to obtain a bank credit card? Explain. 

4. How often should Patricia monitor her credit standing with credit reporting services? 

5. What general advice would you offer for getting Patricia back on track to a new life financially?