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Loans After Bankruptcy? How can it help you?

Why should you take a loan after bankruptcy?

PrudentFinancial-FAQ

PrudentFinancial-FAQ

When you come out of bankruptcy, you’ll want to find a way to re-establish your credit rating. One way to do this is by rebuilding your credit history. You can rebuild your credit rating by taking out a manageable loan and paying it back on time.

You’ll likely find that there are many sub-prime lenders who will provide loans. However, it’s important to choose your lender wisely and know that not all lenders are created equal. Remember, the reason you are getting a loan after bankruptcy is to restore your credit rating. Therefore, it’s important to ensure that your lender reports your loan to the credit bureaus.

Compare interest rates in different sub-prime lenders in Toronto

Don’t fall into the trap of payday loan companies and end up paying huge interest. Payday loans sometimes work for very short-term loans, but you’ll likely pay much less interest by going with a different lender. Keep in mind that payday loan companies don’t report to credit bureaus. As mentioned earlier, stick with lenders that report to the credit bureaus so that you can improve your credit rating.

 Tips for Managing a Loan after Bankruptcy

 

Once you’ve got a loan, there are a few things to remember:

  • Pay off your loan in a timely manner.

    • Banks and other financial institutions are looking closely at how responsibly you repay your loan payments over time.
  • Know your limits.

    • You may have a very low limit on your credit card due to your credit history. Make sure that you know what your limit is and stay below it.
  • Make sure your good loan rating is reported to credit bureaus.

    • As you pay down your loan, you’ll want to make sure that the credit bureaus know about it. Only take a loan from a lender that reports to the credit bureaus.
  • Add a loan later on.

    • Once you’ve been out of bankruptcy for a year or two, you may want to get a line of credit in order to continue rebuilding your credit. Bu, until your credit rating is restored, you will probably have to pay a higher interest rate on this loan, so make sure that you get an affordable loan that you’ll be able to successfully pay off. Once you’ve paid down this loan, you’ll improve your credit score and your next interest rate will be lower.

If you have filed for bankruptcy in the past and you are really eager to start building up your credit history again, it’s certainly possible. Taking out manageable loans from the right lenders can get you back on track.

The above article is for information purpose only. It has no relations what so ever with the services offered by Prudent Financial Services Inc.

Disclaimer

Prudent reports all your Prudent loan payments to credit bureaus. But Prudent cannot “fix” or “repair” your credit. The credit bureau reports on the totality of your credit activities. The bureau updates regularly on your payments on credit cards, utilities, taxes as well as to banks, finance companies, credit unions etc. Prudent does try to educate its credit-challenged customers on wiser management of their financial affairs using information from responsible financial sources. E.g. Bankruptcy Canada and BDO.

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