Dealing With Mortgage After Bankruptcy
Many people have the false notion that bankruptcy puts an end to all great opportunities such as obtaining mortgage. On the contrary, after filing for bankruptcy, applying for a mortgage is easier because your debt to income ratio has significantly dropped.
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Of course, an individual who have filed for bankruptcy must wait until he has been discharged. Although it is possible to obtain a mortgage a month after you have been discharged, it would be wiser to wait at least a year before applying for a new loan.
If you try to apply for a loan immediately after your bankruptcy has been discharged, lenders will likely take advantage of you by charging expensive rates. By allowing at least 12 months to pass by, you can work on your credit history and up-build it to renew a good standing.
The first step in rebuilding credit would be to open a new account outside your bankruptcy record. Opening at least one new account will give you the chance to have a fresh start and raise your credit score. Ideally, opening a department store credit card or a gas station credit card are suffice to give you new credit.
Don’t try to apply to different creditors at the same time, as too many inquiries on your credit report would only have a negative impact on your credit rating. This is also not the time to apply for credit cards that require a good credit standing since a rejection of your application will only hurt your credit score.
Start with a simple account like a department store credit card or a gas station credit card where rules are easier and a high credit score isn’t required. Once you have your store card, make it a point to pay back your monthly bills on time. This is the only way to refresh your credit.
If you still have unpaid bills in your account that have not been discharged, make sure that you finish repaying them. After bankruptcy, you are in a very vulnerable situation, so be particularly aware of your spending. Make sure that you do not borrow more than what you can pay back in a month. If you want to make an improvement on your credit, you can’t afford to make another miss or delay in payment.
Check on your credit report and see to it that all your payments are accurately reported to the three major credit bureaus (Equifax, Experian and Trans Union). Don’t forget to check if there are any mistakes or erroneous details in your report because these can dramatically lower your credit score. If you notice any false detail that needs to be changed, inform your creditor and the credit bureau who issued your report. See to it that your report will be updated.
Following these steps should get you through until your credit status improves. After a year, you should be able to see an improvement in your credit score and this will enable you to get better rates from lending companies when you apply for mortgage.
RELATED ARTICLES
- What Mortgage Loan Lenders Don’t Tell
- A Look at Mortgage Refinancing
- How to Tell When You Are Ready To Buy a Home after Bankruptcy
- Myths on Home Buying
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ABOUT THE AUTHOR
Shelly Evans is a credit analyst for Bad Credit Resources for seven years. This website offers resources that specialize in providing bad credit personal loans and bad credit credit cards to people with poor credit score.
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