Credit After Bankruptcy – Getting Approved For A Mortgage

After a recent or past bankruptcy, most people want to get on
the path toward establishing good credit To accomplish this
goal, some choose to purchase a home While a new home purchase
is a good way to rebuild credit and increase your credit score,
purchasing a home after a recent bankruptcy may result in higher
interest rates and fees
Establishing Credit after Bankruptcy
A bankruptcy will remain on your credit report for seven to ten
years During this time, purchasing a new home, car, or
obtaining a credit card with a prime interest rate will be
tricky Nonetheless, you need to establish or rebuild your
credit When lenders review your credit application, your score
is a key determining factor in whether you are approved If you
have not opened new credit accounts since your bankruptcy,
lenders cannot accurately judge your creditworthiness
There are many ways to re-establish credit after a bankruptcy
Getting a department store charge card or a credit card is an
option If you cannot get approved for an unsecured credit card,
consider applying for a secured card Typically, this involves
putting a down payment on the card
When Should You Apply for a Home Mortgage Loan?
If possible, delay applying for a new home loan for at least two
years following your bankruptcy This will allow you ample time
to rebuild your credit and boost your credit score By doing
this, you may qualify for better or comparable interest rates
Several lenders will approve a mortgage loan application one day
following a bankruptcy discharge Unfortunately, the interest
rates on these loans are several points higher than current
market rates This rate increase will significantly increase
your monthly mortgage payment
How to Get Approved for a Home Loan after Bankruptcy?
Fortunately, it is possible to get a home loan following a
recent or past bankruptcy If you are applying for a loan before
re-establishing credit, contact at least four sub prime lenders
and obtain online quotes While the rates you receive will be
high, you can always refinance in two years for a better rate
If you have established new credit accounts, frequently check
your credit report If you pay your creditors on time and avoid
late payments, your credit rating will improve considerably
After two years, begin contacting mortgage lenders Likewise,
you should also obtain several quotes To speed up the process,
apply through a mortgage brokerage site A single online
application will produce multiple quotes from many different
lenders

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