How You Can Get a Personal Loan After Bankruptcy?
If you have a large purchase that's blindsided you, a personal loan can help you tremendously. However, if you have a bankruptcy on your credit history, qualifying for a personal loan may seem impossible.
It doesn't have to be.
You can still get a personal loan with bankruptcy. Let's look into how this is possible and why it can help rebuild your credit.
What Affects Your Chances of a Loan with Bankruptcy
Bankruptcy causes major damage to your credit. How much so depends on the type of bankruptcy that was filed and your current credit score.
The Type of Bankruptcy that was Filed
Most people file for either Chapter 7 or Chapter 13 bankruptcy.
Chapter 7 involves the selling of your property in order to pay creditors. This type of bankruptcy stays on your report for up to 10 years.
Chapter 13 is a repayment bankruptcy that stays on your credit report for no longer than seven years. During your repayment period, new credit typically needs to be approved by the court, which makes it more difficult to add a new line of credit, such as a personal loan.
Your Credit Score
Right after a bankruptcy, you'll see the biggest hit to your credit. Afterward, it's up to you to start rebuilding your credit history and increase your score. The higher your score, the better you'll look to potential lenders, even with a bankruptcy on your history.
Rebuild Your Credit with a Secured Card
Before applying for a personal loan, you'll want to increase your credit score. Having a secured credit card is one way to do this effectively. However, there are lenders who also help people get loans with bad credit or poor credit.
A secured card requires a deposit, which becomes your credit line. For example, if you put $500 down, that will be your credit limit. To rebuild your credit, use your card monthly and pay it off each month. Over time, your score will start to improve, and you will get to a point where you can apply for an unsecured card.
Look for a Lender that Works with Bankruptcies
If you're in a hurry and need to get a personal loan quickly, it's possible to do so by choosing the right lender. Some lenders will work with clients who have poor credit due to bankruptcy.
Keep in mind that your interest rate will be higher, so ensure you can pay the cost of the loan, including interest and other fees.
Moving On After Bankruptcy
Bankruptcy does not have to hinder you from getting the loan you need. It is possible to get a loan with bankruptcy on your credit report. Follow these tips to get a personal loan and to start building up your credit again.
Continue to manage your finances efficiently and pay off your personal loan or secured cards, and you'll see your score improve dramatically.