Unlike the cries of many bankruptcy opponents, filing bankruptcy does not mean the end of your access to credit. Bankruptcy gives debtors a clean slate, allowing them to free themselves of impossible to pay debt and to begin rebuilding their financial life. One part of that new financial life is access to credit. Below are few facts every bankruptcy debtor should know about getting access to credit after bankruptcy:
- As the years pass, your bankruptcy filing will become less important in the eyes of potential lenders. If you are prudent, you would have begun rebuilding your credit by paying bills on time and creating a paper trail of current accounts in your credit report. One way of doing this immediately after bankruptcy is by applying for and using a secured credit card and later by buying a car or a home or taking out a personal loan.
- Anyone can get access to credit, even after filing bankruptcy. The primary question is not whether you can get credit after bankruptcy, but whether you can get credit with a reasonable interest rate and terms. The price of credit can be reduced significantly by diligently paying bills on time and keeping your debt to income ratio low. It is a lot easier to get credit if you are careful to not accumulate too much of it and only use it when necessary.
- It will be a lot easier to get access to credit to buy a home after bankruptcy than to get access to unsecured credit. Creditors feel better about lending money to debtors after bankruptcy if they have something to secure it with like a home or a car. However, getting access to unsecured credit can be only a couple of years away if you play your cards right after your bankruptcy discharge.