Is It Still Possible to Get a Personal Loan After Bankruptcy?
If you have filed for Chapter 7 bankruptcy, also sometimes called a liquidation bankruptcy, you may wonder if you can still qualify for a personal loan if you need it. The answer depends on certain factors. If you are still in the midst of bankruptcy without it having completely been discharged and finished, then probably not. You generally can’t take on new debt during bankruptcy proceedings, but if your Chapter 7 has been fully discharged, your eligibility can also depend on a variety of things. The two largest factors are mainly your current credit score and how much time has passed since the completion of your bankruptcy.
Chapter 7 bankruptcy remains on your credit report for 10 years after it is completed. If you were late on some payments before bankruptcy, those accounts may come off your credit report earlier at seven years. This can help improve your score, though the bankruptcy will still show on your report for the full 10 years. Just some of the actual late payments and other problems may fall off before then.
Some lenders will not lend to anyone with a past bankruptcy on their credit report. You may still qualify with other lenders, particularly those that specialize in poor-credit borrowers, though you will likely not get the best interest rates or terms for a loan. Luckily, nothing about a past bankruptcy specifically precludes you from getting a personal loan. The hit to your credit rating following one is the main factor that makes it harder to qualify.
Ways to Improve Your Chances to Qualify for a Personal Loan
Shop Around With Multiple Lenders and Get Pre-qualified
One of the best ways you can improve your odds of qualifying for a personal loan is to shop around and get pre-qualified with multiple lenders. Pre-qualification generally does not impact your credit score as it counts as a soft credit pull rather than a hard one. So it may not cost you anything to get pre-qualified from multiple places and see which lenders will let you borrow and compare interest rates and terms from those that do. Just make sure that the pre-qualification process does not include a hard credit pull, or don’t get one from that lender. Move on to another that can pre-qualify you with a soft credit check instead.
Find a Cosigner for a Loan
If you have shopped around and didn’t get pre-qualified, the next best thing for you to do would be to find a co-signer. A co-signer is someone who agrees to take on the debt if you default on payment, but it shows up on their credit report as if it was their loan. It also gets reported on yours as well. This can help you qualify for a loan and get better terms and interest rates as well. Though it may turn out harder than you’d think to find someone else willing to take on that responsibility. This option can help you get a personal loan if you need it.
Consider Getting Credit Builder Loans and Secured Credit Cards
While bankruptcy can make a big dent in your credit, you can start to rebuild it once it is over. Payment history makes up 35% of your credit rating, so you can start to build it back with either a credit builder loan or a secured credit card. With a credit builder loan, the lender deposits the loan amount into an account, and you make payments until you pay off the loan. Then they release the funds after you have paid it off, so it works the opposite of a typical loan. For a secured credit card, you make a deposit, and that becomes your credit limit on the card. These two products make great vehicles for safely showing on-time payments to credit reporting agencies, and the monthly payments for both of these options work well together to help you rebuild credit after bankruptcy.
Max Cash® is Here to Help
Here at Max Cash®, we are constantly expanding both our partners and the variety of financial products that we can connect you to.5 The best part is that we do the work for you so that you only need to fill out one application on our website to potentially get pre-qualified from many of our lenders. 4 5 Whether you need a personal loan or another form of financing, we can help you shop around even faster. 4 5
