Qualifying For a Loan After Bankruptcy - How You Can Be Approved

Many borrowers who have become overwhelmed by their outstanding debt find it necessary to file bankruptcy, and you may be among those who have been forced to file bankruptcy in order to protect yourself from losing your home or other assets. Bankruptcy wields the hardest blow on your credit rating that you can imagine, but you can rebuild your financial future and get a loan after bankruptcy with a few smart moves. Qualifying for a loan after bankruptcy is not impossible, just a bit tricky.

Small Steps To Recover From Bankruptcy

The first step for any person who has just come out of bankruptcy and had their bankruptcy discharged should be to check your credit report and credit score. Legally, you are entitled to a free copy of your credit report from Trans Union, Equifax, and Experian, which are the three most widely recognized credit bureaus doing business in the United States. Review your reports for accuracy, and do not feel satisfied to view just one report because each of the three bureaus may have a different way of accounting for your previous credit history. Check to be sure that all accounts that were closed during bankruptcy are noted as such as open accounts and a bankruptcy will make your score drop even further.

Demonstrating Responsible Behavior

Your next step is to establish two banking accounts - one for checking and one for savings. These accounts do not report to the credit bureau or add points to your score, but your management of these types of accounts shows responsibility and the skills needed to handle money. Potential creditors like to see that you are capable of handling banking accounts.

You should then proceed to establish at least two secured credit card accounts. Having a credit card is a sure fire way to add points to your FICO credit score. The secured credit card account allows you to have access to a credit line that is equal to the deposit that you make with the bank or lending institution that issues the card. Start out small with perhaps two $1000 accounts until you have built your score up enough to get a traditional, unsecured credit card (usually about six months to a year after your bankruptcy is discharged). Run a thirty percent balance (in this case, around $300 or so)and make your payments in a timely manner without ever charging more than half of your available credit (in this case, no more than $500 per month).

Getting Your First Post-Bankruptcy Loan

Once you have paid on these two secured credit card accounts for awhile (around 6-18 months) you will find that you are ready to begin the process of getting your first post-bankruptcy loan. Start small with a small loan of less than $5,000 and pay it off within one year. Once you have passed this major hurdle, you will no doubt be able to qualify for bigger and more valuable loan products at great interest rates later on down the road, regardless of your past bankruptcy history.

Unsecured Personal Loans - A Loan For Everyone

Unsecured personal loans may be the way for you to get the money you need - especially if you do not have a good credit rating. Lenders are available who will be glad to give you the money you need - and it is possible to get a sizable loan, too. Here are some things you need to know to be able to get the loan you want.

Most lenders, these days, will extend unsecured personal loans to many borrowers. The good news is that you do not need to have a good credit rating in order to qualify. Your credit score will, however, effect the actual interest rate that you get, and it may also effect the amount you get. So, before you apply make sure your credit report is accurate.

The amount that you can borrow also depends on your ability to repay the loan. If you now have a good job, and make a good income, then you could even get well over $200,000 in some cases. You will be able to use the money for anything that you would like, whether it be for a vacation in the Bahamas, skiing trip in Switzerland, a luxury car, debt consolidation, a college education, or even renovations to your home.

Your loan, after you apply can be more quickly approved than a secured loan - because no evaluation of any collateral will need to be evaluated. This means that you could get a response from the bank in just a few minutes, and the money could be made available to you within 24 hours.

In any cases, the money from an unsecured loan will need to be deposited directly into your checking account. This gives the lender some form of comfort in knowing that you really do have a bank account, and they will need to be able to withdraw the money from it automatically - if you default on payments. Other situations, such as if you get an unsecured loan in the form of a payday advance, or payday loan, the lender will want to take the full amount out of the account of the day that the loan becomes due.

Before you get an unsecured loan, however, you might want to know that you could get better interest rates from a secured loan. If you own a home, then you may want to consider a home equity loan - both of which will get you better interest rates. But if you have nothing to give as collateral then an unsecured loan may be just the thing you need, and could give you 5 years to repay it.

Getting a good deal on an unsecured loan will mean that you should shop around some before you sign. There will be some variation on interest rates and other conditions. By obtaining several quotes you will be able to avoid some bad deals and be able to get a deal you can be happy with. You will also want to make sure that the unsecured personal loan will not penalize you with a prepayment penalty - paying the loan off early.