A Better Credit Risk After Bankruptcy?

Many people fear that after they file for bankruptcy, their credit will never be the same. They will never be able to own a home, finance a new car, or have the safety net that good credit affords them. But the reality is that you may be a better credit risk to some lenders after you file for bankruptcy.

Although you may currently be keeping your bills out of collections, those 30, 60, and 90 days past due marks on your credit report add up. Furthermore, many creditors take a look at how much debt your have, before allowing you to have more credit. So, just because you believe you have good credit because you are making the minimum payments on all of your debt, does not mean that lenders see it that way.

Lenders are aware that after you file for bankruptcy, you will not be allowed to do so again for 6-10 years. They are also aware that you will be free and clear of any debt — which mean that you will have the financial ability to repay new debt. They may prefer that you prove yourself by keeping a secured credit card paid off for 6-12 months before giving you new credit, but you may well be a better candidate for credit than you were before your bankruptcy.