Credit After Bankruptcy - Repair & Rebuild Your Credit Score
How easy is it to get credit after bankruptcy?
The biggest concern for those planning to file bankruptcy, or who have already done so, is the status of their credit after bankruptcy. Of course, we've all heard the rumors - bankruptcy kills your credit for life, you'll never have another credit card, and forget about ever owning your own home or buying a new car! Drastic, yes, but is it true? Not necessarily.
The old notion was that if you had a bankruptcy on your record, you were a terrible credit risk and no company dared get involved with you again. You were doomed. Now, however, companies view the post bankrupt as individuals with a fresh financial future. You don't owe any debt, and you are banned from applying for another bankruptcy for the next six years. Bankruptcy does not remove you from the credit scheme of life. There is hope for credit after bankruptcy.
Basically, bankruptcy can stay on your credit report for ten years after filing. Although credit is viewed as a privilege, the United States Bankruptcy Code ensures that employers and the government have no right to discriminate against those who have, or who are planning on filing bankruptcy .
Since credit is a measure of your financial integrity, anyone with a history of bankruptcy proves that they have dodged debt before. So obtaining and rebuilding new credit can be costly, and companies will make you pay for it with high premiums and stratospheric interest rates.
Here's a brief overview to credit and credit repair after bankruptcy:
Credit cards: Many credit card companies have special offers targeted to the post bankruptcy crowd. Some companies even allow you to keep your current credit card through bankruptcy proceedings. Call your credit card company's customer service department to inquire about available options.
Car and Personal Loans: Loans are a bit harder to obtain than credit cards due to strict underwriting criteria; a certain credit score is usually required and bankruptcy severely lowers your score. There are a number of alternative lenders who offer loans, but these loans often come with interest rates at least 3 percent higher than loans made to those in good credit standing. Contact lenders in your area for more information.
Mortgages: Debtors are usually in good standing if they wait two years before applying for a mortgage after bankruptcy, as long as they have a good history of payment in that period. Refinancing, though, may be difficult and the rates will be painfully high. Consult a mortgage broker about your case.