Everyone can agree that filing for bankruptcy was never in their life plans and that it can impact future home buying plans, ability to borrow money, and your credit score. However, with proper financial planning and patience.
Cleaning up and organizing your credit score
Buying a home is a big deal, and after bankruptcy you need to prove to lenders that you are responsible and your past financial problems are resolved. There are a few things that need to be done to help you take out a home loan in the future. The first step is cleaning up and organizing your credit report. Make sure your credit report is accurately portraying the outcome of your bankruptcy. If there are debts that have already been paid but it does not show on your credit report, call your credit agency and prove to them that the debt was included in a bankruptcy and has been discharged. it has been taken care of. Check for mistakes and have them corrected. Remember that you are entitled to a free credit report from each of the rating agencies once every 12 months. Additionally, the dispute process is free to you. Keep in mind that your credit history is not “erased” on the report but that the bankruptcy overrides the prior entries so that underwriters and lenders can understand that the debt you had prior to filing a bankruptcy has been discharged.
How to start rebuilding your credit score
Now that you have cleaned up your credit report, you need to show lenders that you can pay back money that you owe. The fastest way to effectively rebuild your credit score is to use secured credit cards and installment loans.
It is hard to get an unsecured credit card coming out of bankruptcy so a secured credit card is your best option. It provides you credit limited to the amount you have on deposit with the issuing bank. For example, if you have $500 to put in the account of the issuing bank, your credit will be limited to that deposit.
An installment loan is where a borrower makes installment payments every month. The most important thing is making your monthly payments on time. Installment loans can include personal, car, or student loans.
When you are trying to rebuild your credit score, make sure you are paying all your bills on time and even early if you can. Be sure you do not max out your credit cards and apply for too much credit at once.
The waiting process and applying for a mortgage
After your bankruptcy has been discharged, you need to exercise patience and wait at least 24 to 36 months before you apply for a mortgage loan if you choose to go through a bank or other lending institution. Each lender has its own requirements for length of time between a bankruptcy and being accepted for a mortgage loan, so explore your options and don’t get discouraged if one lender turns you down. Additionally, make sure you are prepared to apply for a mortgage by having money in the bank, no bounced checks, and a stable job. Remember that a large down payment will be very beneficial in the long run as it will keep the amount financed and monthly payment smaller.
If you are considering filing for bankruptcy because of the financial rut in your life you can contact bankruptcy attorney April Randle. She is knowledgeable, caring, and can help you overcome your financial stresses. Bankruptcy law is the only kind of law the Randle Office handles, so you can be assured that you are in great care. Let April Randle help you rise above your financial challenges and get back on the right path so you can focus on what is most important in life.