After filing for bankruptcy, many people despair that they’ll never be able to get a personal loan. The good news is that this is by no means the case. In fact, while the bankruptcy can stay on your credit report for up to ten years, you can still begin the process of rebuilding your credit immediately after you file. There’s no reason why you can’t get back into a position to qualify for a personal loan after your bankruptcy. Here are some important steps you can take to make this process as fast and efficient as possible.
There is no question that a bankruptcy will hurt your credit. However, your credit can begin to rebound right after you file. In fact, the debt discharge might make you more credit worthy from the get-go by improving your credit-to-debt ratio. To ensure that this process is underway, check that the three major credit reporting agencies are correctly showing your bankruptcy. Make sure that all accounts involved in the bankruptcy process show a zero balance and are labeled as “discharged.”
It’s crucial that, following the bankruptcy, you pay all your bills on time every time a payment is due. A good strategy is to keep one account open, but maintain it with a zero balance. Once a month, make a few purchases; then promptly pay off the balance.
If you’re having trouble opening a credit account following your bankruptcy, you might consider a secured credit card. These are cards designed for people with poor credit to begin the credit rebuilding process. They require you to deposit cash as collateral which then becomes the credit line. When applying for any new credit post-bankruptcy, be careful that you don’t overdo it. It’s crucial to avoid the past behaviors or patterns that may have contributed to the bankruptcy.