Getting Loans after Bankruptcy

While bankruptcy appears on a credit report for 10 years making an already bad credit rating even worse, you do not have to wait for 10 years to be over to restore your credit and qualify for a loan.

Getting approved for loans after bankruptcy may be difficult but it is possible. Here are some ways on how to get approved for loans after bankruptcy:

1. Whether you are getting a car loan, mortgage loan or personal loan, one major factor that will get you qualified is your present income. Financial institutions who offer loans after bankruptcy are more concerned about your present finances than your past credit problems. Lenders want to be certain – and you should too – that this time you can afford to make payments on a loan. So, if you have a steady and sufficient income, you have a good chance of securing loans after bankruptcy.

2. You will also have to prove how well you make payments. Again, lenders will not focus on your credit payment history ending in bankruptcy but rather on the payments that you have made since your filing. So, it is important if you have just recently filed bankruptcy to ensure that all succeeding payments to any existing financial obligations are met regularly and on time. Check with credit-reporting companies if your credit payments are being reported.

3. For car loans or mortgage loans after bankruptcy, another important consideration is the down payment. If you have enough funds to put down on a car or a house, then finding a lender will not be a problem at all.

4. Your credit rating is based on the information contained in your credit report so you would want to make sure that it is accurate. Get a copy of your credit report and check for errors.

Before you apply for loans after bankruptcy, it may be good to first look back and figure out what went wrong in your finances to avoid going through the same path twice. Were you overspending? Was your income simply not enough to support you, which resulted in too much debt? Did a sudden illness, accident, or unemployment drive your finances to the ground?

If the reason you went bankrupt were big and unforeseen expenses, then prepare yourself for these times. Invest in an insurance coverage and set up a savings account strictly for emergency purposes only. This way, you lessen the need to borrow money and reduce the risk of acquiring too many loans after bankruptcy than you can handle.

On the other hand, if you went bankrupt because you cannot control your spending, then you have to start being responsible with your finances. You may want to ask yourself if you really need to get a loan this time. If you do, ensure timely payments. This way, you can make good use of loans after bankruptcy not just to finance your needs but to rebuild your credit.