Personal Loans after Bankruptcy: Unsecured Borrowing Options Explained

Bankruptcy is an easy relief from intolerable debts, but, at the same time, is a clear indicator to lenders that you chose to hide behind bankruptcy protection instead of honoring your financial obligations. That is exactly why bankruptcy hurts your credit scoring most of all negative items, and may prevent you from borrowing again. Therefore, recovery from bankruptcy may be a challenging and lengthy process, requiring patience and effort on the part of the borrower. Luckily, bankruptcy is not the end of the game, and you may rebuild your way back to the point where you would be able to get unsecured loans again. While bankruptcy usually stays for 10 years on your credit report, your ability to borrow may be regained way sooner than that provided you make all necessary steps to recovery.How Lenders Rate YouBankruptcy moves you right on the bottom of the list of consumers who lenders are willing to entrust their money. There is nothing personal about it; it is just how statistical formulas play. While there is nothing you would be able to do about your bankruptcy record, the good news is that lenders consider many other factors outside your credit ranking, which means that if you play your other cards right, you may be able to persuade them to loan money to you again. Aside from numeric scores, lenders consider your income, employment, current debt load, life expenses, financial stability, and many others. What it means to you is that if you would be able to pass all other requirements, besides the credit requirement, you might be able to land a loan offer from lender.Why Would Lenders Finance Post-Bankrupt ConsumersThere are also other, less obvious reasons why lenders would finance people with bankruptcy on their record. Bankruptcy law states that a person who has previously filed bankruptcy should not be able to file subsequent bankruptcies for at least six years following previous bankruptcy discharge. What it means to lenders is that they get additional security, as borrowers in default would not be able to use bankruptcy protection again. Another reason why lenders may be willing to finance people fresh out of bankruptcy is that their debt-to-income ratio (DTI) is minimal, as people hardly have any outstanding debts left bankruptcy.Effective Tips to Secure a Loan after BankruptcyThere are several simple yet effective methods to improve chances of getting a loan after bankruptcy. You may consider opening secured credit card to add some credibility to your credit report, as secured credit card report the same way to credit agencies as traditional credit cards. Finding a cosigner with a decent history of loan payments is another way to not only get an unsecured loan, but also benefit from lower interest rates and charges. Seeking alternative lenders that offer bad credit loans is the best tactic to get unsecured financing, as traditional banking institutions would most likely be out of your reach with recent bankruptcy on your credit file. Looking online for specialized lenders would help you to get an unsecured loan for whatever financing needs you may have, as well as help you on your way to rebuilding solid credit history.