While life after bankruptcy can be challenging, it's not as hard as most people think. It's still possible, for example, to apply for and be granted a personal loan. It won't just be handed to you, though, because you have some proving to do after your financial hardship.
1. Monitor Your Own Credit Report
Credit reports are no different than any other files that need to be updated, and they're often updated automatically by programs that don't know or care if they're completely accurate. For instance, paying your utilities on time at a new apartment might not register on your report, making it look like you haven't even begun re-establishing your credit. Some information may be omitted, and some might even be inaccurate. Once you call a credit bureau and speak with a person, you'll understand how different data can get mixed up, leaving you with a less-than-accurate rating. Between human error and software glitches, you might not be represented very well by your credit report.
2. Beef Up Your Debt-To-Earnings Ratio
One of the primary factors any lender uses in determining your eligibility for a loan is your debt-to-earnings-ratio. Even if you've filed for bankruptcy in the past, you can still prove your ability to pay by keeping your debt-to-earnings ratio beefed up. Simply keep your earnings as high above your debt as you can, and pay all of your bills on time or early. This proves ability and willingness on your part, opening the door for lenders to take a chance and grant you a personal loan, even though you've had a rocky financial past.
3. Work To Elevate Your Credit Score
Every little thing you do may affect your credit score, from applying for too many loans to paying even a day late on your auto payment. Be excruciatingly careful with your score, gradually building it up. You could be approved for a secured credit card (one which you've already put money down for, guaranteeing your repayment) and systematically pay the minimum every month. Actions like this will bring your number up and keep it steady.
4. Visit A Lot Of Lenders
While you want to investigate as many personal loan options as possible, you don't want to apply for all of them. A hard credit check (one that may affect your credit score) is usually performed, and it can dampen the positive feel you're trying to give your financial profile. Visit lenders and talk to them, honestly explaining your situation, including how much you want to borrow for your personal loan, what you want to use it for and how you plan on repaying. Sometimes, personal loans don't need to be explained to lenders and banks, but if you've filed for bankruptcy and are on thin ice, credit score-wise, you should present a practical reason.
If a lender thinks you're being frivolous or may not be able to pay, they'll tell you so. You can then take what you learn to the next potential lender or put off applying for your personal loan until you've built a more appealing financial profile for lenders to evaluate. If you're trying to apply for an unsecured personal loan and the reception you get is cold, consider applying for a secured personal loan, which makes the loan much safer for the lender.
5. Don't Accept Bottom Of The Barrel Offers
Just because you have a bankruptcy in your past doesn't mean you have to accept whatever offer for a personal loan is made to you. Examine the terms and make sure you can live with them and that the experience with the loan will leave your credit rating in a better position after repayment than what it's in now.
A personal loan can do a lot to revive your financial heartbeat, from helping you to rebuild your credit to fixing the other things in your life that are broken. You'll have to work to get it, though, and work even harder to make sure you repay the loan on time. By doing this, you can prove your creditworthiness to the world and, which will hopefully set a positive course for your eventual financial recovery.
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