Can I get credit after bankruptcy? How soon?
The short answer is, yes and quickly. But do you really want it? Credit cards, in particular, are a big reason you may be in financial trouble anyway. Also auto loans. And, as you can imagine, these are the two easiest to get out of bankruptcy.
Many clients report getting a new credit card while IN the bankruptcy still before discharge! The interest rate is often high (20%+) and there is usually an annual fee. But I do recommend people eventually (w/in 6 months) get 2 credit cards or so, which they should pay off every single month. This will help rebuild your credit history and score. However, carrying high balances or having late payments will actually make you worse off. So, it’s a delicate situation with credit cards…always.
As for auto loans, these are things people also get almost immediately after discharge. Interest rates are often over 20%. The result is that from a financial planning perspective it is almost always not a good idea to get a car loan so quick out of bankruptcy. The upside is that this open loan account, if paid on time, will help raise your credit score. But the true cost of such loans–with those staggering rates–is simply not worth the credit score boost.
The rule of thumb for mortgages is a little bit different. Generally, you must be at least 2 years out of bankruptcy to get a new home loan (or refinance). This is a strict FHA rules for government backed loans. Most banks also follow this rule for conventional mortgages. There may be banks that make exceptions, but I don’t know of any.
For more information call Attorney Newton today at (312) 948-4084!