How to Get Loans After Bankruptcy
Bankruptcy can seriously disrupt your financial health. The record remains on your credit report for up to 10 years. Often, lenders are far more cautious with borrowers who've filed for bankruptcy. One way in which borrowers who've filed for bankruptcy obtain credit is through bankruptcy loans. The problem with these is that they're often extremely high-cost and come with very restrictive terms.
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Instructions
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Pull a copy of your credit report. If you're going to apply for credit after a bankruptcy, you'll need to prove that, in other matters on your report, you are not a huge credit risk. This will be hard to prove, but it will be nearly impossible if you don't know what your credit looks like. See Resources below for a free copy of your credit report. Look for positive lines of credit you've established--especially if they were not included in the bankruptcy. Look for good payment history on any accounts and remember to bring this to the attention of lenders when applying for loans.
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Join a local community credit union. There may be one at your workplace. Establish a checking and savings account with the credit union and get to know the local bankers. After you've been a customer for at least six months, apply for a personal loan. If you have your paycheck directly deposited into the credit union, the local bankers may be much more willing to deliver a small loan.
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Open a passbook credit account. These accounts require that you have an open savings account at a banking institution because these loans are collateralized with the money in your savings account. If a bank loans up to 50 percent of the balance, and you have $3000 in savings, you can get a passbook loan for $1,500. While these loans will not help your credit report (most are not reported), they will improve your standing in the bank's eyes -- something that may help you secure an unsecured, credit-bearing account in the future.
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Use a co-signer. Sometimes lenders are willing to overlook a bankruptcy if a co-signer with solid credit will agree to obligate himself or herself to the account. This is not a guarantee, but in many cases, the lender feels these loans are a far better risk than simply one borrower with a bankruptcy. Remember: When signing with a co-signer, he or she is as obligated as you are, and you run the risk of ruining a relationship with said co-signer if you default on the loan, and he or she gets stuck with the payments.
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