Getting Credit After Bankruptcy

Getting Credit After Bankruptcy

If you’ve recently been discharged from bankruptcy, it’s certainly a weight off your shoulders. This means the debts are no longer owed, however, the bankruptcy record will still show on your credit report. Many people go through bankruptcy and completely change their relationship with money, which in some ways makes you an even better prospect to lend to. You don’t have a stack of other debts, to start with. However traditional lenders don’t see it that way, so as you’re coming out of bankruptcy, here are some tips to follow while trying to obtain credit.

Be Wary of High-Interest Rates

Some larger financial institutions won’t even consider lending you money if you’ve recently been bankrupt. In some ways, this is better than one of the alternatives - dodgy lenders looking to take advantage.

Less than reputable finance companies may see your recent bankruptcy as an opportunity to give you finance, but still make you pay for past mistakes. This could come in the form of exorbitant interest rates or unfair loan terms. Unfortunately, this is the reality you’ll face with certain finance companies, so it’s best to avoid them altogether if possible.

Consider a Co-Signer

A co-signer is someone who can take out a loan with you. They’re not accepting full responsibility for your debt, however they essentially take up half the burden. Naturally, you would want this to be a trusted friend or family member, and also someone who trusts you to make the payments on time, every time.

When you co-sign on finance, it’s in both person’s names. It means there’s an element of trust required on your part too, even if the other person isn’t expected to pay. Legally, they may have a claim to half of the car or property. The best thing about co-signing for finance though, is both credit records are looked at. So, if yours isn’t great but the other person is spotless, collectively you’ll have a better credit rating than you would on your own.

Don’t Be Afraid of Loans, But Borrow Smaller Amounts

Many people come out of bankruptcy fearing the same thing happening again. So, they steer clear of loans and finance wherever possible. The problem with this is you’re not giving your credit history a chance to repair. 

Naturally, you’ll be cautious when considering finance, and it’s advisable to only ever borrow what you can comfortably pay in regular installments. But don’t completely shy away from finance. If you can access smaller lines of credit and maintain good payment history, it looks good on your credit rating down the track.

Find Smart Alternatives to Big Lenders

Finally, if you want to stay away from dodgy lenders or the embarrassment of getting knocked back by the big banks, there is an alternative. Contact Freedom Cars today to find out how we can get you in a vehicle quickly, with no interest. It’s not a loan, just a series of manageable regular payments. We don’t do invasive credit checks, and we gladly work with people who have been bankrupt. At Freedom Cars, we say “Yes!” when lenders have said “No.”