How to Get Credit After Bankruptcy

You may worry that you’ll never get credit after bankruptcy, or that it’ll take years to re-establish your credit. Neither is true.

Credit Cards

Many credit card companies let you to keep their credit card for use after bankruptcy if you agree to reaffirm the balance on the card and enter into a new agreement after the bankruptcy filing. This means that you agree to keep paying that credit card debt. These lenders want to be paid in bankruptcy, and they also want your future business. In fact, many people receive credit card offers right after they’ve been through bankruptcy! 

Getting New Credit After Bankruptcy

In today’s competitive lending environment, credit is available to the recently bankrupt. It may be more expensive than before, and available with lower limits, but it will be offered. A secured credit card (one backed up by money in the bank) is usually available post-bankruptcy at lower rates than unsecured cards.

Of course, you should use credit carefully and pay on time. Don’t make the mistakes that led you to bankruptcy in the first place.

Buying A Home After Bankruptcy

Studies show that 18-24 months after a bankruptcy, debtors can qualify for a loan on the same terms as if they hadn’t filed bankruptcy. The lender is more interested in your down payment, the stability of your income, and the relationship between the loan payments and your monthly income.

Effect Of Bankruptcy On Your Credit Report

Bankruptcy is no more harmful to your credit record than the financial facts that led to the bankruptcy filing.

Most debtors in bankruptcy proceedings, even those who never missed a payment, couldn’t get new credit from a lender who looked at their financial condition. So the fact that there are no negatives on your credit report doesn’t make much difference.

Bankruptcy at least makes the debt shown in the negative history unenforceable. So, you’re a far better credit risk after bankruptcy than before filing. Unfortunately, some credit managers may not understand bankruptcy or look beyond its negative aspects.

A bankruptcy isn’t going to remove the fact that you owed money to a creditor listed in your bankruptcy. Credit reporting agencies are within their rights to show accurate history about your financial affairs. You’ll want to correct any errors on your credit report and make sure that the bankruptcy discharge also shows on your credit report. That way lenders will see that those old creditors have no legal claims remaining against you

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