Getting credit again and qualifying for a home mortgage after bankruptcy take time, but not as long as you might think. How does filing bankruptcy affect you getting credit, your credit score, your ability to get a home mortgage? CNNmoney.com recently published an article that explains very well how filing bankruptcy and suffering a mortgage foreclosure may affect your credit score [click here].
Although a bankruptcy stays on your record officially for 10 years, it generally does not affect your ability to obtain credit for nearly that long. I have informed my bankruptcy clients over the past several years that it generally takes about a year from the date of the bankruptcy discharge to qualify for credit at about the same interest rate as someone who has good credit and hasn’t filed bankruptcy. This is based upon national reporting services such as CNNmoney.com, and other news services. Obtaining a credit card with a low credit limit about six months after receiving a bankruptcy discharge also helps, especially when the balance is paid in full every month before the payment due date. Your interest rate would be determined by your income just as it would be for someone who had not filed bankruptcy. If your income is sufficiently stable and high enough at that time, with no credit problems during the year after receiving your bankruptcy discharge, you should expect a reasonable interest rate.
With all the uncertainties of the real estate market and mortgage financing that have arisen over the past few years, mortgage companies are presently requiring substantial down payments and significant income for anyone to qualify for a home loan. At present, mortgage companies would consider for approval for a mortgage two years after receiving a bankruptcy discharge, but you would need to have the money saved for the down payment and have income that would satisfy the mortgage company to obtain a mortgage.
Should you worry over what impact filing bankruptcy will do to your credit score? If your monthly payments on credit card debt, your mortgage, car payments, medical debt, or any other debts, are more than you can pay, your credit score is not going to improve by taking no action. You need to address the problems that are damaging your credit score sooner rather than later. Call my office at (937) 293-2392, or email me at [email protected], to schedule an appointment, and I will show you how to get started on the road to financial health.