A bankruptcy can be a good way to get your financial health back on track, but it also comes with some limitations. It may make it so it’s harder for you to get credit or loans in the future, at least for a few years.
If you do need a personal loan after your Chapter 7 or Chapter 13 bankruptcy, it may be possible to get it. The length of time it will take for you to get a loan will depend on the kind of bankruptcy you chose as well as how long it has been since you went through it.
Chapter 7 and 13 bankruptcies affect you differently
Chapter 7 bankruptcies stay on your credit for 10 years while Chapter 13 bankruptcies can fall off your report after seven years. You may think that you won’t be able to get a loan until after that, but fortunately, you can.
You can start by looking for lenders who specialize in giving loans to people who have poor credit. Make sure to compare different lenders’ rates and offers, so you can still get the best deal. You may be able to reach out and ask what the minimum credit score is and clarify if they’ll lend to those with bankruptcies in their histories, too.
Then, apply for prequalification. Prequalification doesn’t impact your credit under most circumstances, so you’ll have an idea of what you can borrow without bringing your credit score down.
Once you prequalify and find a loan you like, you can apply for it. You’ll get a final offer at that time, and you can decide if you’d like to go through with taking out the money.
Is it a good idea to take out a personal loan after a bankruptcy?
Everyone’s circumstances are different. Taking out a personal loan and paying it back on time may help you improve your credit score by showing that you can borrow and repay money on time. Just make sure you don’t take out too much money. Select a loan with payments that you can afford, and focus on paying it off as soon as you can.