How Soon After Filing Bankruptcy Will You Qualify For New Credit?

While a bankruptcy is reported on your credit for 10 years following the filing of your case, it doesn’t mean it takes 10 years to obtain more credit. Typically, recent bankruptcy filers qualify for certain types of credit immediately after their bankruptcy is discharged.

Bankruptcy - How Soon to File Bankruptcy

After a good payment history of approximately 18-24 months on this new credit, you will begin to qualify for most types of loans at competitive rates. Creditors also look at your income, other debts, and assets to determine what loans you may be eligible for. How long it will take you to qualify for new credit is not set in stone and will vary for each individual, but below is general guidelines for when you can expect to qualify for different types of credit:

Real Estate

As a rule of thumb, lenders do not consider bankruptcies if you attempt to obtain a home loan at least two years after receiving your discharge. When buying a house, although it is often wise to wait the two years to rebuild your credit and save for a down payment, there are some lenders who may finance a mortgage in as little as one day after your bankruptcy discharge. However, the interest rates offered by those lenders are generally significantly higher than the rate you could obtain after rebuilding your credit for two years.

How long it will take you to qualify for new credit is not set in stone and will vary for each individual…Auto Loans

While the initial interest rates available to you are steep, financing a car immediately after your bankruptcy has been discharged will most likely be an option. Look in any paper or auto magazine and you can see many car dealers advertising that they extend credit to people recently out of bankruptcy.

Credit Cards

Credit cards are also usually available immediately after receiving your discharge. In fact, in many cases the very same creditors whose debts were just discharged in bankruptcy may offer you more credit. Creditors are motivated by future profits, not past losses, and see the bankruptcy on your credit report as an opportunity to justify charging you higher interest rates and fees. Secured credit cards, which require a deposit, are readily available after bankruptcy and can be used just like a regular credit card. Obtaining new credit and managing it wisely is the best way to improve your credit following a bankruptcy — even if obtaining more credit equates to higher interest rates in the short-term.

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