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How To Get Credit After Bankruptcy

How To Get Credit After Bankruptcy

The decision to go bankrupt is one not to be taken lightly, as there are many implications from doing so, and some long lasting after effects.

Knowing what will happen should you go bankrupt, and getting professional advice is imperative when making such a decision.

Bankruptcy is a big deal, and needs to be approached as such, and you also need to be aware of the longer term implications, such as your credit.

With that being said/written, if you need to go bankrupt, worrying about your credit is the last thing you should think and worry over, you need to deal with the matter at hand, and that is getting relief from the debts you currently have.

It may have been your good credit that got you in the position you are in.

One side note to mention, bankruptcy does not carry the stigma that it had in years past.

If you look at the number of insolvencies and the rise in bankruptcies, you are not alone. And there are many reasons and factors why someone may need to go bankrupt, and some are beyond their control.

Illness and losing one’s job are two that come to mind.

One of the longer long range implications of going bankrupt is how it impacts your credit score and credit rating; obviously it lowers your score and is a negative mark on your credit file.

This negative mark or record of you going bankrupt stays on your credit history for a period of six (6) years. Then it is supposed to drop off, as everything drops off after six years on your credit history.

So does this mean you will have to wait six years to ever get credit again?

No.

And by answering some questions people have about bankruptcy and their credit we will see it is possible to rebuild your credit after going bankrupt.

Some facts to remember:

* Bankruptcy stays on your credit history for six (6) years. However, some mortgage lenders ask the broad question, “have you ever been bankrupt?”. This is not asking if you have been bankrupt in the past six years, or even if you have been bankrupt in the UK, just have you ever been bankrupt.

* While you are bankrupt, a period of 12 months, you are not allowed access to credit above £500 without the Official Receiver’s permission. And odds are you will struggle to even be approved for £500 or less.

* Once your bankruptcy has been discharged, which is usually a 12 month period, you can apply for and receive credit.

So now your bankruptcy has been discharged, you are no longer bankrupt, you owe no debts, what can you do to begin the process of getting credit again?

Baby Steps

Start slow and easy, right after being discharged from being bankrupt, is not going to be a good time to apply for credit, in addition, applying around for credit creates footprints on your credit file which lowers your credit score.

First get a copy of your credit history and credit score and see where you stand. If there are any errors or omissions, get them corrected.

Next, if you are not already get on the electoral role. Lenders use this to verify identities and your address.

These are beginning, baby steps, that along with these next steps and time that will aid in rebuilding your credit.

The Next Step

Once you have verified your credit score and credit history, this gives you baseline to work off of.

You should have a bank account, if not open one, a basic account will do. Pay your rent, and all your bills on time.

Inquire with your landlord about getting on the Rental Exchange.

This is where your rent gets reported to the credit bureaus, and you get credit for paying your rent, and paying it on time.

This can be a biggie in rebuilding your credit history.

And More

After a period of time of paying your bills on time, your wages going into your bank account, and your bills being paid out, you may wish to inquire with your bank about a current account, or a small overdraft, say £50 or £100.

This is another way to begin the process of rebuilding your credit.

There also are credit building credit cards. These companies grant a small line of credit on a credit card to those that may have low credit scores.

The interest rates can be high, but they are another way to rebuild one’s credit.

There are also loans that allow someone who has been bankrupt to rebuild their credit. Guarantor loans are one such type of loan.

These loans are based on affordability, and the fact there is a guarantor for the loan, someone who knows the borrower and states they will pay the payments should the borrower fail to do so.

There also is time, the great healer.

As time passes you will find it easier to get credit, especially if you follow the above advice. Even getting a mortgage after being bankrupt is possible, and the larger the deposit you have increases your chances.

Most people that go bankrupt need to do so, they need to get out from under the debts and bills they have so they can begin a new life, without the financial stress.

Worrying about your credit if you need to go bankrupt, is a waste of your energy. Yes, your credit is going to be affected negatively by going bankrupt, but yes, you can rebuild your credit again.

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<strong>What is Our Criteria For Applying?</strong> 
Every lender on our website has their own specific criteria by the basics are mentioned below and you must have a guarantor to be eligible. Simply select the lender of your choice and you will be taken directly to their website where you can apply. You will be required to submit your details including:<li style=”text-align: center;” data-mce-style=”text-align: center;”>Name (must be over 18 as the borrow, 21 or 25 as the guarantor)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Residence (your chances will improve if your guarantor is a homeowner)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Employment status (must be employed or on a pension)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Income (earning at least £600 per month and able to make repayments)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Monthly expenses (not have too many loans open or in major debt)</li>
 
You will then be asked to include the details of your guarantor and as mentioned above, this is usually someone who you know and trust and wants to help you with your personal finances. Ideally, a guarantor with good credit will maximise your chances of being approved based on the idea of ‘if someone with good credit trusts you, well we can too.'<strong>How Much Can I Borrow From Guarantor Loans?</strong>Guarantor Loans gives applicants the chance to borrow £500 to £15,000 depending on the lender. Some lenders we feature like Buddy Loans only have a maximum loan value of £7,500 and TFS Loans is the only lender that stretches up to £15,000.Factors that can influence the amount you can borrow revolve around having a good guarantor. One that is a homeowner, with solid employment, income and good credit rating will maximise your chances of borrowing the largest drawdown possible.The lenders featured on Guarantor Loans see a homeowner as someone who has already gone through the rigorous process of credit checking and affordability and if they can afford a house, they should be able to act as a guarantor for you.By comparison, having a guarantor that is not a homeowner offers slightly less security and means that amount you can borrow is slightly less too.Higher amounts may be available to those who already have a better than average credit rating, are homeowners themselves and a repeat customer with the lender who has already paid their loan on time. To apply directly with your lender of choice see <a href=”https://www.paydaybadcredit.co.uk/direct-lender/” data-mce-href=”https://www.paydaybadcredit.co.uk/direct-lender/”>direct lenders</a>.<strong>What Does The Guarantor Have To Do?</strong>Upon completing an application, the lender will typically send you a <a href=”https://www.handbook.fca.org.uk/handbook/CONC/4/2.html” data-mce-href=”https://www.handbook.fca.org.uk/handbook/CONC/4/2.html”>pre-contract loan agreement</a> and SECCI (Standard European Consumer Credit Information form) which will highlight the terms of your loan. You and your guarantor will be required to review the terms of the loan, including the loan drawdown, fees, repayment dates and responsibilities – and this can be signed via an online verification process using your email and mobile phone.The lender will usually carry out an individual phone call with you and your guarantor to ensure that you both understand the responsibilities and what is required of you – notably that if you cannot make repayment, your guarantor will be required to pay on your behalf. Further to some additional credit and affordability checks, funds can typically be transferred within 24 to 48 hours (or sometimes on the same day).<strong>Are Guarantor Loans Available For Bad Credit Customers?</strong>Yes, even if you have a history of adverse credit, <a href=”https://www.gov.uk/county-court-judgments-ccj-for-debt” data-mce-href=”https://www.gov.uk/county-court-judgments-ccj-for-debt”>CCJs</a>, bankruptcy or IVAs several years ago, you can still be eligible. The idea is that you are using your guarantor and their financial history to ‘back you up’ and give your loan extra security. However, it is noted that your guarantor should have a good credit score and consent to co-signing your loan agreement.<strong>How Soon Can I Receive Funds?</strong>Guarantor Loans works with lenders that can facilitate funds within 24 to 48 hours of approval, or sometimes on the same day.When your funds are successfully transferred, most lenders working with Guarantor Loans will send the full amount to the guarantor’s debit account first. This is a standard security measure carried out by lenders to ensure that the funds are going to the right person and confirms the involvement of the guarantor. The guarantor usually has a ‘two week cooling off period’ where they can decide to pass on the money to the main borrower or they can change their mind and return the funds with no extra charges.