If you declare bankruptcy, it can be a difficult thing to secure a loan in the future. Bankruptcy destroys your credit rating. Indeed, lenders are loath to lend money to a person who has declared bankruptcy. However, it is still possible to qualify for personal loans after bankruptcy.

If you do want to qualify for personal loan after bankruptcy, lenders will look at four things to determine your acceptability for the loan.

1.      Your Credit Score

2.      Your Collateral

3.      Your Existing Debt

4.      Time Since Bankruptcy Declaration

Note that these are factors that any lender will use to decide whether to lend you money or not. But there are online lending firms that specialize in giving out personal loans for people with bankruptcy. You stand a much less chance of being rejected than say if you visit a bank. You still will have to prove you can repay the loan though and you will pay a higher interest rate. You can find these lenders online if you look around.

Now, we will look at each one of these contributing factors and discuss what you can do to help push the odds in your favor of getting a personal loan after bankruptcy.

Credit Score

Your credit score is absolutely essential if you want to qualify for a personal loan after bankruptcy. You will have to meet – and even exceed – the minimum require credit score that a lender stipulates if you wish to qualify for the loan after you have declared bankruptcy. Note that some lenders automatically discount people with bankruptcy on their credit scores – but some do not. You should ask the lender if they will still lend to borrowers who have declared bankruptcy.

Now, if the lender doing indeed agree to lend, what can you do to improve your credit such that you can pass the minimum credit score for a personal loan after declaring bankruptcy?

The number one thing you should do is to order a credit report from all three credit reporting agencies. These are Equifax, Trans Union, and Experian. You can find a variety of websites that will sell you the credit card online so you can instantly see your report. The next thing you need to do is to scan the reports and report inaccurate or obsolete information. You can send a request to the agency publishing to report to investigate and remove that information.

Collateral

The next factor that lenders will look at when considering to give you a personal loan after bankruptcy is the collateral you have. Why is this the case? Because lenders like collateral. Should you default on your loan, the lender can seize the collateral you have put up against the loan. Collateral reduces the risk lenders take – especially if you have declared a previous bankruptcy. This type of loan is called a secured personal loan. If you can give the lender some collateral, they will be MUCH more included to lean you the money.

Current Debt

As a rule of thumb you want to make sure you don’t have too much in the way of personal debt when you make an application for a personal loan after bankruptcy. This is because having too much debt will cause the lender to worry that you won’t be able to make the repayments on your personal loan, due to having other debt obligations. You should ask the lender if that have what’s called a “minimum income requirement” that you must satisfy. If they do, make sure your meet this before applying for the personal loan after bankruptcy. Not meeting it will get you turned down.

Time Since Bankruptcy

The final thing the loan company will look at when considering giving out a personal loan after bankruptcy is the amount of time since the bankruptcy. If you’ve declared bankruptcy 20 years ago and your credit is still bad, forget about getting a personal loan. But if you’ve developed a positive credit history since the bankruptcy, you are in a good position to get that personal loan. Lenders want to see your credit history has been good for at least two years.

These are the four points that lenders will use when considering whether or not to give you a personal loan after bankruptcy. While it is difficult to secure one of these loans, it certainly is not impossible – especially if you have developed good credit since the bankruptcy and you have collateral to put up against the loan amount. Even if you end up getting rejected, don’t despair. Just keep on working on your credit score and reapply in the future. If you are in desperate need, there are specialized companies online that will offer you a personal loan after bankruptcy. However, you will end up paying higher interest rates, so keep this in mind.