Can You Get Good Credit After Bankruptcies?
Yes, you can get good credit after bankruptcy, but you have to wait more than 6 years for this to happen. You can accelerate the process by obtaining a cash secured credit card or a cash secured loan to help rebuild your credit, but these will only be of marginal benefit until the majorly derogatory notations left on your credit report from the bankruptcy are removed 6 years after you are discharged from bankruptcy (this happens 9 to 21 months after you file for bankruptcy if you follow the process and complete all its conditions). Once this super negative information is dropped from your credit report 6 years after your discharge from bankruptcy, your credit will rebound rapidly if you have good things reporting on your credit bureau such as a cash secured credit card, loan, or cell phone plan. You could also have someone add you as an authorized user on their credit card. This could possibly also help. Once your bankruptcy information is erased from your credit report, you are basically starting fresh with a clean slate. You are then able to rebuild your credit score without any impediments.
How Fast Can You Come Back From Bankruptcies?
From a credit perspective in Canada, it takes well over 7 or 8 years to come back from bankruptcy (9 to 21 months for the bankruptcy process and then 6 years until all bankruptcy info is removed from their credit reports). However, there are things that can be done to work around the restrictiveness caused by the terrible credit that results from bankruptcy. These work-arounds are not easy or convenient but some are possible. These could include obtaining a cash secured credit card or a cash secured loan (to rebuild credit). It’s possible that some lenders could allow someone with a record of bankruptcy on their credit report to apply for a vehicle loan or mortgage if they have one or more highly qualified co-signers. Another way of obtaining credit and improving one’s credit would be to become an authorized user on someone else’s credit card. This could be one’s partner or a friend or family member. This person would essentially be guaranteeing the card because if anything bad should happen, this person would be responsible.
Is It Hard To Get Credit After Bankruptcies?
Yes, it is very difficult to get credit after bankruptcy. In Canada, the bankruptcy process takes 9 to 21 months, and then if you did everything you were supposed to do during the process, you will be discharged from bankruptcy. Once this discharge happens, the countdown begins for when all derogatory information from the bankruptcy will be erased from your credit report. Unfortunately, you have to wait for 6 years for this to happen (and then it should take place automatically after the 6 years are up). During this time, it is extremely difficult to obtain credit. One reason is that a notation is placed on your credit report stating that you filed for bankruptcy. This notation freaks creditors out, but that’s not the only problem. The bigger problem is that almost all lending to consumers is based on their credit score. All debts that are included in a bankruptcy are assigned the worst rating possible (because the debt was not repaid as agreed and instead was written off as unpaid and will never be repaid). Having this rating on one debt will tank someone’s credit score, but having this rating on multiple debts, completely kills someone’s credit score.
With a terrible credit score, someone cannot qualify for any normal lending product such as credit cards, loans, line of credit, overdraft, or a mortgage. However, there can be ways to sort-of work around this. One way would be to obtain a cash secured credit card. With one of these, you put cash on deposit as security (a guarantee) for the credit limit that the lending company grants you. So if you want a credit limit of $1,000, then you would put down a $1,000 deposit as security for that credit limit. You would then get your $1,000 back in the future when you decide to close the card. However, while you have the card, it would report to the credit bureaus as any other credit card would and helps to slowly rebuild your credit. A card like this could also be used for hotel deposits when traveling. To obtain a car loan or mortgage during the 6 years following bankruptcy would require a highly qualified co-signer if a lender will allow this.
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