Will I be able to qualify for an auto or home loan with a bankruptcy on my record?
One of the main concerns of potential bankruptcy filers is what impact a bankruptcy will have on their credit. Rebuilding your life post-bankruptcy could require taking out a loan to pay off bills, purchase a home, or buy a car. There is a common misconception that a bankruptcy on your record will destroy any chances of taking out a loan or securing credit. Our Ohio bankruptcy lawyers explore the realities of taking out a loan post-bankruptcy and how you can improve your credit below.
Bankruptcy and Your Credit
Filing for Chapter 7 bankruptcy will take a hit on your credit report. A bankruptcy can remain on your credit report for up to ten years, but there are many steps you can take to start rebuilding your credit right away. It is certainly possible for a bankruptcy filer to qualify for a loan within a short time post-divorce.
You can start the process of rebuilding your credit post-bankruptcy by checking your credit report. Before you can rebuild, you will need to know where you stand. You can obtain a free copy of your credit report. Ensure that all of your bankruptcy related accounts have been marked as discharged.
Build Your Credit
Once you know where your credit stands, you can start the rebuilding process. Immediately after the bankruptcy, you should be able to open a secured credit card. You open the card by making a deposit, which will then become your credit line. A secured card is a great way to build credit, so long as you remember to keep your purchases to a minimum and always pay off the bill.
You may also be able to obtain certain types of loans post-bankruptcy. Some banks or credit unions offer credit builder loans aimed at assisting borrowers with poor credit. With these loans, you can borrow a small amount and repay it in fixed monthly amounts. Successfully repaying some of these smaller loans could build your credit and open the door for larger loans.
In time, as your positive credit history builds, you will be able to qualify for an auto or home loan. It is important that you keep your debts as small as possible to avoid repeating past mistakes. Contact a bankruptcy attorney for more assistance with rebuilding your financial future.