How
to rebuild your credit after Bankruptcy?
It is a heartening
news that even bankrupt people are also provided with fresh credit for
acquiring homes.
However,
such credit comes with a high interest rate and with lesser quantum of
loan amount, the reason being that the bankrupt people are categorised
as high-risk borrowers. And the credit is also closely supervised and
monitored.
Though Bankruptcy
can relieve the person form all his obligations of loan repayment, a bankruptcy
status will sit on ones credit rating for at least 10 years and
you may have to take the subsequent credit cautiously and use it devotedly.
A person
who filed bankruptcy earlier will be able to get further loans at a higher
rate of interest because of the risk involved in lending to such person.
The difference in rate of interest may even go up to 2 percent on the
higher side.
However,
if you choose to pay off your small time liabilities such as credit card
liability and small loans, you stand a better chance to improve your credit
rating with your lender to a significant level.
The first
and foremost point is that you should put forth all your efforts to establish
a good credit rating after bankruptcy and it is essential to give importance
to things such as:
Paying
your bills in time
Acquiring
secured or unsecured credit card
Restricting
your expenditure to well within your capabilities
Closely
monitor all your credit needs and achieve a better credit report
Lenders who lend further credit to a bankrupt person normally look for
three main things before venturing out. They are:
1. They look
for unblemished repayment record, at least for the past two years. By
ensuring such repayment, they come to a conclusion that you have got the
intention to repay with a regular income.
2. Lender
always looks for down payment to reduce their exposure to credit.
3. They expect
a steady income and the same should be sufficient to service the proposed
loan as well as other existing disclosed liabilities.
Getting a
home loan after filing bankruptcy is no longer a problem as there are
special loan packages and very flexible terms for those who have filed
bankruptcy in the past.
Bankruptcy
is not a limiting factor for a lender to lend money to a person who has
filed bankruptcy earlier, as the asset or the home is taken as collateral
security for obvious reasons.
To summarise,
work hard to make extra money in your spare time so as to have a better
cash flow, start doing some freelance work, if possible start a profitable
business.
Try to make
more money to meet the down payment requirement as this particular area
immediately boosts your credit rating and the chances of your getting
your loan approved will get increased dramatically.
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