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Published On: Tue, Oct 4th, 2016

Should Bankruptcy Stop You from Getting a Personal Loan?

Having filed for bankruptcy doesn’t make the possibility of getting a personal loan zero. There are other kinds of loans for people with poor credit. However, after going bankrupt, you need to start afresh and prove to lenders that you’ve indeed learned from your mistakes, and you are still worthy to be given financial aid.

Secured Credit Cards: The First Step in How to Get a Loan After Bankruptcy

A person with an average or high credit score could get their mark reduced to 100 points after filing bankruptcy. The damage could be worse if you have an already low credit score. Before going for bad-credit loans, you need to try establishing your credit score again. A good way to start is to get a secured credit card. Just deposit an amount of cash, and that will then be your credit line. The process on how to apply for a secured credit card is quite simple, so it shouldn’t be a trouble.

How Lenders Decide When to Give You Credit

If you only pay your bills on time, your credit score will readily start to get better as you maximize your secured credit card. Responsible usage of a secured credit card proves the creditworthiness of borrowers. After just around a year of consistent payments, your payment history will look better, and your chances of getting bigger loans will be higher as well.

photo/ Michael Jarmoluk via pixabay

photo/ Michael Jarmoluk via pixabay

Personal Loans: Secured vs. Unsecured

We have two kinds of personal loans: the secured personal loan and the unsecured personal loan. As for a secured personal loan, for those with credit issues, just relinquish your property or deposit cash to the lender. This kind of loan is best for those with bad credit or those who just experienced bankruptcy since the lenders won’t have to look through your credit record anymore. They already have the collateral to minimize the risk on their end.

An unsecured personal loan is the type which doesn’t involve any collateral. However, if you do not pay off the loan, the lender is to use other ways to collect the amount, like your bank account garnishments or your wage.

Bad-Credit Personal Loan Lenders

Starting with your bank, you can get multiple options to get a bad-credit personal loan. You need to provide data on your savings as well as your home and car. Whether you’re going to qualify for a secured or unsecured personal loan will depend on your credit.

Another way to access secure or unsecured loans is via credit unions. There are key advantages of choosing credit unions since they offer better interest rates than banks. However, the terms and criteria usually vary since each credit union typically has a different setup.

You can even resort to a digital lender. You do not need to go through banks with peer-to-peer lending. In P2P lending, investors tend to pool money for borrowers. However, your credit history is still the basis.

If you still don’t qualify using the above means, it’s best to contact a financial advisor like David Barcomb. Financial advisors can lead your way to building your credit history, getting better options, and qualifying for your much-needed personal loan.

Author: Lolita Di

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