How to Get a Loan After Baknkruptcy
Going through a bankruptcy is not only financial devastating, but the mental stress is enormous. When it is over, you have some work to do. First, clean up your credit reports so that you can begin to reestablish credit, and rebuild your finances.
- Difficulty:
- Moderate
Instructions
Things You'll Need
- Bankruptcy discharge papers
- All three credit reports
- Savings account
- Proof of income
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1
Get copies of your recent credit reports by going online to annualcreditreport.com. These are free once per year. You want to view the bankruptcy accounts to be sure all state that they were included in the bankruptcy. If they are incorrect, call each of the bureaus, dispute the errors. Within 30 days, these errors should be corrected. You may need to fax the bankruptcy papers to each of credit bureaus. With a corrected credit report, you can begin a fresh start of reestablishing credit.
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2
Try getting "piggy back" accounts added to your report. If your mom or dad--or someone you know and trust--has excellent credit history, see if they will add you to one or two credit card accounts which are old and have great payment histories. They add you as an authorized user, and the card's payment history is reported on your report, which will create a score. You don't get use of the card, only the history. It take 30 to 45 days to establish, so give it some time, and repull credit reports to monitor.
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3
Set up a savings account with your bank, and talk with your banker. Tell him that you need reestablish credit and need an account. He may offer a secured credit card. This is a credit card account that is secured by the savings account. The limit will be low, but eventually--with a good payment history--the card limit will increase. Also, within months, they might release the hold on the savings account. Keep the balance no more than 30 percent of the credit line, and make payments on time.
Remember: this is a tool to get you back on your feet.
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4
Consider buying a used car. If you need a car, getting a loan that is secured by collateral (the car) may be easier. The bank may require a substantial down payment, and the interest rate may be high. Remember: this is a tool to get you back on your feet. You may want to get the car dealer to put you with a loan finder service who may give you some options. Choose the offer that fits you best, and very carefully make all the payments on time. After awhile, you can refinance the loan with your own bank at a better interest rate.
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Tips & Warnings
When you are making corrections on your credit reports after the bankruptcy, add a statement to the bureaus stating the circumstances under which you filed. It should state that the reason was outside of your control.
It is more beneficial in the long run to make a substantial down payment on a car, than to use a coborrower. The coborrower is a guarantor of your loan. In other words, he is on the hook if you default.
