Steps for Getting Approved After Bankruptcy

By: Melissa Kellett

Trying to get finance after bankruptcy without preparing yourself it is just like knowingly jumping into a pool that has no water. By applying for a loan after bankruptcy your are risking getting declined and lowering your credit score even more. If you plan to apply for a loan, you need to do some homework beforehand in order to increase your chances of getting approved.

A bankruptcy on your credit report is really a drawback, however, some lenders are willing to approve loans even if you have gone through a bankruptcy as long as it has been discharged and you can prove that you are to be trusted. To prove such a thing you need to make sure that your credit behavior shows no stains for a significant period of time.

Recreate Credit By Paying On Time

To start recreating your credit, you need at least six months of uninterrupted bill payments. During this period you need to avoid missing payments, paying late, opening new bank accounts, closing existing ones, requesting credit cards or loans, having too many credit inquiries on your credit report, etc.

Just pay your bills on time and reduce your debt exposure as much as possible without closing accounts or taking new debt. Slowly, your credit score will begin to rise and recover. Your credit history will start to show an uninterrupted pattern of timely payments that will aid you in this new task.

Credit Cards Can Aid Your Credit Repair

Once you can obtain a credit card, do so. A credit card will aid you in recovering your credit because all the payments are immediately recorded into your credit report as credit card issuers report to credit bureaus on a regular basis. Just make sure your payment behavior is impeccable.

This implies paying always on time, never (absolutely never) missing a payment and paying your balance in full. Try as hard as possible to avoid paying only the minimum payment on your credit card as this creates a bad antecedent and risks your ability to repay if any unexpected situation reduces your available income.

Personal Loans Can Also Boost Your Credit Score

At this stage you might be able to successfully apply for a personal loan. Start with small loans as there are a lot more chances of getting approved this way. Also, request short repayment programs, this will not affect your credit score and you will improve your credit history as soon as the loan is repaid in full. After repayment you will be able to request loans for larger amounts and so on.

The loan payments will also be recorded into your credit report, raising your credit score and improving your credit history. Though it may take a while, this procedure will eventually lead you again to having a good credit score and to recover your ability to get finance at more reasonable terms: You will get higher loan amounts, longer repayment programs and lower interest rates. A good credit score is just a few steps away!

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