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Personal Loans for Those After a Bankruptcy
If you need a loan after bankruptcy, then you might need to understand a little bit about personal loans for those with less than perfect credit. This article will tell you everything you need to know about personal loans after bankruptcy.
Sometimes it’s not easy to get a loan of any sort after bankruptcy, but this simply isn’t true. Many people think that the bankruptcy must be eliminated from their credit report before they can apply and get approved for a personal loan. However, this thinking is wrong and even those with a recent bankruptcy can become approved for a personal loan from a bank or another lending institution.
Personal Loan Guidelines After Bankruptcy
It’s important to be very careful with any personal loans you decide to take out after a bankruptcy. Especially if you want to improve your financial situation. With a bankruptcy, you will have to take specific steps to help improve your credit score and get rid of some of the accounts you have defaulted on. Start by looking for the right lender that can offer you a personal loan after bankruptcy. Very rarely, a lender will require you to clear the bankruptcy from your credit report before they approve you for the loan you need and want.
Personal Lenders for After Bankruptcy
Many lenders offer personal loans after bankruptcy, but you still need to make sure you find the right type of loan for you and apply for one you will be approved by. As long as you have improved your credit score in one way or another, after bankruptcy, you will be able to find a lender that will work with you.
They will, however, look at the income you have and make sure you can handle the payments on the loan you want to take out. Credit won’t be the only deciding factor and if your income can support the loan, most of these lenders will take into consideration how much you make and how long you have been working for your current company.
Improving your Credit Score
Before you decide you want to get a personal loan after bankruptcy, you want to make sure you have done everything you can to improve your credit score. Your bankruptcy might cause your credit score to drop by as much as 100 points. However, once the bankruptcy is discharged and some of the debts go away or change your credit score will start to recover.
You want to make sure your credit has recovered quite a bit before you try to get a personal loan of any nature. You may want to hire a company to help settle some of the debts you still have or to help get rid of debts that your bankruptcy handled. If you can get your credit to the point where e you don’t have any negative debts, then getting approved for a personal loan will be very easy. Also, take the time to ensure any errors are removed or fixed. You can do this by writing a letter to the creditor or making a phone call and asking to have them report the correct information. If that doesn’t work, you can simply dispute the debt with the credit agency.
Other Things to Consider
Once you fix your credit, you still need to consider a few things before applying for the right personal loan for you. If your credit score becomes very good, many financial institutions will allow you to get a loan through them. It will not be very hard to get your loan if you have a good credit score and a strong income. Some lenders will charge a higher interest rate due to your bankruptcy. This is due to how risky your loan is compared to another one. Most lenders, however, will overlook your credit history and will not care much about the bankruptcy. Make sure you understand all the policies of the lender before you take out the loan.
Your debt amount could also cause you an issue, but after bankruptcy, this should all be cleared up. This type of loan will help you whenever you want to get a loan after you have filed for bankruptcy. Personal loans after bankruptcy will help you do more with your finances and will allow you to take care of anything you need to deal with currently or in the future.
Bad credit is no longer a deterrent
Summary- Gone are the days when having a bad credit score meant you could no longer avail any loan. Sub-prime lenders nowadays provide unsecured loans to those with adverse credit score.
Loans rejected because of bad credit are past tense now. There are many lenders in the UK loan market who are willing to lend you money on interest despite your adverse credit history. Bad credit holders used to consider it a daunting task to avail loans, especially the ones without security.
But, the UK loan market has witnessed many advances in the technological sphere. The competition among lenders has accelerated and so is the variety of loan products in the market. The use of web media for advertising for and selling loans has revolutionized the loan market.
Unsecured loans are not backed by any security and this naturally invites risk for the lender. The lender has no security in the form of borrowers assets to fell assured. The only thing he looks at is the credit history of the borrower. It is indicative of the past repayment records of the borrower. On the basis of this, the borrower’s credibility is assessed. But, what if you have a poor credit history? What if past arrears, defaults and CCJs have stained your repayment history? Sub-prime lenders, especially the private and online are there to help you out with your financial problems.
Unsecured loans are high risk lending options for the lenders. Thus, they charge high APRs. The APR can be higher if the applicant suffers from bad credit score. The lender compensates the risk involved in the loan deal by charging a high APR. Availing unsecured loans at high interest rates is not a bad deal if you neither have any security to back your loan, nor a good credit status to boast of.
If the borrower has a good DTI (debt to income) ratio, he can expect to get a cheap unsecured loan. This is because DTI calculates the disposable income of the borrower. And if the lender finds that the borrower had a bad credit past but now he can afford to pay the loan installments, he happily grants unsecured loans.