Filing for bankruptcy certainly obliterates your eligibility to borrow money, mainly in the months after filing and settlement. Buying a new house, however, within 18-24 months of filing is feasible if you aware of the essential steps to be taken.
After filing for bankruptcy – chapter 13 or chapter 7, it doesn’t matter – your credit score will be radically impacted. It would probably reach the lowest point. However, you now know where you stand financially and you have learned a lot from this experience. And the good news is, you are at the lowest credit score you can ever get and there is only one direction to move in – and that’s up.
So, let’s move forward with an immediate logical question. How do I get my finances right to improve my credit score and avail a mortgage for new home purchase?
Buying a new home is a BIG investment for anyone; it would require big money. Yes, the mortgage is available. However, to avail this loan, you will have to convince creditors that your bad times are gone and you are working on improving your financial stability.
For buying a house after bankruptcy, the first thing you will need to do is try to improve your credit score. Make sure rating agencies are reflecting the current status of your situation. If some creditor is paid in full or was due before bankruptcy and the report still shows it’s overdue, contact your credit bureau and inform them about your current status. Though these reports are computerized and calculated automatically, there are chances of errors. You can avail these reports once a year and review it.
If you want a mortgage immediately after filing for bankruptcy, you need to prove the creditors you can be trusted upon. There are two methods to do so.
Get a Secured Credit Card
Nevertheless; it would be quite difficult for you to avail an unsecured card. You will have to deposit some amount or provide collateral to the bank in order to receive a secured credit card. And you would be allowed to use credit beyond the amount of collateral.
Get an installment loan and make regular payments
If you can manage to get a personal, car, or student loan, get it and start paying installments on time. This will help you to improve your credit score.
Filing for bankruptcy doesn’t mean you have to wait for another 10 years to buy a new home. Taking a few essential steps and being a bit smart can help you to avail a mortgage very quickly.
These things will definitely help you to avail a mortgage. However, you need to have the right approach; realize it’s time to get a bit responsible and believe buying a home after bankruptcy is possible.
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