How does Bankruptcy affect my Credit?

 

 Many consumers who have filed for bankruptcy have been able to obtain a mortgage, although it is often at a higher rate than someone qualifying for a prime or “A-paper” loan.

While credit card companies may care about what happened before you filed for bankruptcy, many mortgage lenders are more interested in your recovery – what you’ve done since your filing. It won’t happen overnight, but here are some tips and things to keep in mind when you inquire about a mortgage with a tarnished credit past:

• Give explanations.
  No mortgage lender is going to ignore the fact that you’ve filed bankruptcy and he or she will likely want to know the cause of the filing. Your lender will be particularly interested in whether the same situation could happen again. Your chances of being qualified are much better if your bankruptcy was caused by a single event such as a loss of employment or a death in the family, than if it was the result of “just spending too much.”If the bankruptcy resulted from a single event, it is important to show your lender paperwork describing the incident, such as the layoff notice or death certificate. You may also want to bring in court documents to indicate when the bankruptcy was filed.

• Demonstrate good money habits now.
  Many people who file bankruptcy swear off credit altogether, however, it is important to reestablish your credit rating. Get a secured credit card or take on some sort of loan – furniture, a car or a major appliance – to demonstrate that you are able to make timely payments. Make sure you are making other payments (utility bills, cell phone, etc.) on time as well. You won’t turn things around in a year but your credit score will improve over time.

• Dispute any credit report errors.
  Get a copy of your credit report from each of the three major credit reporting agencies: Equifax, http://www.equifax.com; Experian, http://www.experian.com; and TransUnion, http://www.tuc.com. If you encounter any errors, inform the CRA in writing what information you believe to be inaccurate and request deletion or correction. 

• Save your money.
  Consider saving up an amount of money for a down payment. 

• Live within your means.
  Think small when the time comes to look for a home. Smaller homes often mean smaller mortgages.

Source: https://fhmtg.com/

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Lisa Perry, Senior Loan Officer

"Your Northern VA Mortgage Specialist"

540-273-2733

NMLS ID #86548 / 276329

Email:  LPerry@fhmtg.com

Apply on line:  LisaPerrryLoans.com

 

 

 

 

 

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