After filing a bankruptcy, you can still apply and get approved for a personal loan. However, you’ll hardly qualify for the lowest interest rates. Improve your credit score to secure cheaper loan options.
Is a personal loan possible after bankruptcy?
After you file a bankruptcy, your credit scores drop. It can naturally prevent you from getting approved for a loan as your score is lower than the minimum credit requirements for loan approval. Besides, the bankruptcy is seen on your credit report and stays there for up to 10 years, depending on the type of bankruptcy.
Still, you can qualify for a Personal Loan or another unsecured loan type. However, you should keep in mind that interest rates may be higher than for borrowers with no bankruptcy before.
There are two common options available for applicants that want to get low-interest Personal Loans:
- Apply for a secured loan with collateral or co-signer
- Improve your credit score or get a credit builder loan
How to Get a Personal Loan After Bankruptcy
Apply for a loan to lenders that offer no-credit-check loans, but watch out for high interest rates and fees.
Though getting a Personal Loan after bankruptcy may take some time, you only need to follow a few easy steps to receive the money:
- Check your credit history, make sure there’re no mistakes on the report, and do your best to raise the score
- Prepare all the necessary documentation required to apply for an unsecured personal loan. Be ready to provide proof of your regular income and pay attention to other factors useful to convince a lender to approve you for the money.
- Fill out a loan application online or in a store, get instant approval and money into your bank account within a few business days.
What you need to apply for a Personal Loan after bankruptcy
Direct lenders that offer loans to borrowers with a bankruptcy on their credit report have the following basic requirements:
- 18+ years of age
- US residency
- Active banking account
- Proof of income
- Contact information
Besides, applicants are to provide the following documentation:
- Government-issued ID
- Proof of address
- Income verification
- Employment verification
- Desired loan amount
- Desired loan use
- Desired loan term
What affects your personal loan eligibility after bankruptcy
1. The chapter of bankruptcy you filed
It can be Chapter 7 or Chapter 13 bankruptcy. In the first one borrower’s property is sold to repay creditors; in the second one the repayment plan of up to 7 years is used.
Chapter 7 bankruptcy discharges debt, but stays on your credit report for up to 10 years and damages your score for a long time. Chapter 13 is in your report for a shorter time – 7 years, and thus has less damage to the score. But it’s not recommended to take out other loans while you are fulfilling the repayment plan.
2. The period of time that passed after you filed for bankruptcy
Chapter 7 bankruptcy will stay on your credit report for up to 10 years while Chapter 13 bankruptcy – 7 years. Some lenders may refuse you for a loan till the bankruptcy disappears from your report. For others credit score is more important, so it’s a good idea to wait till it improves.
3. Your credit score at the moment when you apply for a loan
The higher your credit score, the more chances you have to get approved for a Personal Loan after bk.
5 easy steps to apply for a personal loan after bankruptcy
When you need instant personal loan after bankruptcy — and feel that your budget will allow you to repay it on time — just take a few simple steps to apply for a loan at the best possible interest rates.
- Get a copy of your credit reports.
- Determine your debt-to-income (DTI) ratio.
- Prequalify online to check if you’re eligible for a loan.
- Compare the lenders and choose the best offer.
- Fill out the application, submit it and sign the loan agreement after approval.
Bottom line
Filing for bankruptcy can save you in some situations, but on the other hand, it can damage your credit score for a rather long time. If you are looking for a personal loan after bankruptcy, you can expect a higher interest rate. To get a lower rate, apply for a secured loan with a co-signer or improve your credit.