How to Get a Personal Loan 2 Years After a Discharged Bankruptcy

Bankruptcy is not the end of the world. Contrary to popular belief, you can improve your credit and secure financing after a bankruptcy. While you'll almost certainly face disadvantageous rates and programs, you can use sub-prime lenders and loans to begin repairing your credit report. While you may be disqualified for large loans (like mortgages), you can obtain a personal loan if two years have elapsed since your bankruptcy. The process, however, will likely be challenging.

Instructions

1

Pull a copy of your credit report. You can access a free copy at Annual Credit Report (see Resource 1). You need to find out how your credit fared after your bankruptcy. Pay for a copy of your Fair Isaac Corporation, or FICO, score, too. This is a three-digit number between 300 and 850 that represents your creditworthiness. Scores above 720 are excellent; scores below 600 are poor.

2

Do not over-apply. Excessive inquiries (more that six in a six-month period) will negatively affect your credit. Instead, eliminate lenders that do not cater to sub-prime borrowers--like credit unions and local banks.

3

Research finance companies. These companies, like CitiFinancial and Wells Fargo Financial, offer higher rates and fees on their programs and will often consider borrowers who suffered bankruptcies. Make sure to research the reputation of each of these companies at the Better Business Bureau (see Resource 2).

4

Print out a copy of your credit report and circle all positive aspects of your credit. This includes accounts not included in the bankruptcy and paid well, well-paid secured loans (like car loans) and positive payment history on new accounts obtained after a bankruptcy.

5

Apply to two or three lenders. Make sure to provide your credit report, a letter explaining the delinquency that led up to the bankruptcy and copies of your income documents (pay stubs and W2s).

6

Review all loan offers with a trusted advisor--like an accountant or attorney. It is crucial that you do not take a loan that will place you in a more precarious financial position. While you will likely pay more for the loan, you must be wary of predatory lenders.

7

Accept a loan offer only if it meets your financial needs and if you are confident in your ability to repay the account.