Buying A Home After Bankruptcy – How To Improve Your Chances Of Getting Approved

After a recent bankruptcy, many people assume that purchasing a new home is impossible. No doubt a bankruptcy is extremely damaging to your credit history, and most lenders are not eager to loan you money or extend credit. However, there is good news for the millions of people who file bankruptcy each year. Contrary to popular opinion, homeownership after bankruptcy is very attainable.

Delay the Home Buying Process

Although it is possible to get approved for a home loan one day after a bankruptcy discharge, financial experts, and mortgage lenders do not recommend this maneuver. You can expect to pay ridiculously higher interest rates and fees immediately following a bankruptcy.

The key to getting back on track financially is establishing new credit accounts. However, it is wise to start with smaller accounts, as opposed to a home mortgage. These may include accounts that you can pay in full each month. For the most part, you should delay the home buying process for at least 24 months. During this time, open new credit accounts and establish a good relationship with your new creditors.

Improve Your Personal Credit Rating

By opening new credit accounts and establishing new credit relationships, you will boost your overall credit rating. Following a bankruptcy, most people have very low credit scores. A low credit score warrants denials for credit cards and loans. Moreover, a low credit score will forfeit the opportunity to attain prime rates.

During the two years following your bankruptcy, strive to increase your credit score. This will take time. The best way to increase your personal credit rating is to avoid paying your bills late. Furthermore, avoid too much debt. Maintain small credit balances, and try to payoff your credit card balances each month.

Make a habit of regularly monitoring your credit report. It is recommended that consumers attain a copy of their credit reports about every six months. As you open new credit accounts, and maintain a good payment history, this will be noted on your credit report. If errors are present on your report, contact your creditors and the bureau to resolve the inaccuracies.

Using Sub Prime or High Risk Mortgage Lenders

A bankruptcy will remain on your credit report for approximately ten years. During this time, most lenders will not offer you prime or low interest rates. To avoid paying higher fees, you must finance your home with a sub prime lender. Sub prime lenders specialize in high risk loans and mortgages. Their goal is to get you the best financing package for your circumstances.

Buying A Car After Bankruptcy?

If you are buying a car after bankruptcy, here are a few suggestions that could help:

First, you want to make sure you’ve done everything you can to increase your credit score. Once you’ve done that you’re ready to start shopping for your car!

Here’s a question for you: Is it better to get outside financing or get financing through the dealership when you are buying a car after bankruptcy. The answer is… drum roll please… it depends!

It’s worthwhile to apply for outside financing when buying a car after bankruptcy. But make sure you do it through the right lender. If you don’t, you could end up paying $100s or $1,000s more in extra interest. If you even get approved at all.

Now let’s assume you’ve done your homework. You found the car you like, you know how much that make and model sells for, and you know how much your trade in is worth. It’s time to visit the dealership…

Let’s say you find the specific car you want to buy. Now you’re going to need to negotiate the price.

If you lined up outside financing, then you’re in a good position from a negotiating standpoint. But what if you could not get outside financing for a car after bankruptcy? What if you need to depend on the dealership to get you financed when buying the car after bankruptcy?

Many people think that since they had a bankruptcy they are at the mercy of the car dealership in this situation. THIS SIMPLY IS NOT TRUE!

Let me share a little secret with you: If the dealership has run your credit report and they start negotiating with you, then they’re pretty sure they can finance you. After all, do you really think they would waste their time negotiating a price with someone they did not think they could finance? Of course not!

Here’s where things get interesting. How many times a year does the dealership negotiate with buyers? Probably hundreds of times a year at a decent sized dealership. Now what about you – how many times do you negotiate for a car? If you are like most people, it’s probably once every so many years.

Most people will thoroughly research the price of the car they want to buy. If it’s new they’ll take time to find out the dealership’s cost and, if they have one, the value of their trade in.

…and they’ll go back and forth with the dealership for two or three hours until everyone agrees on the numbers and a sale takes place.

Chances are the buyer still may have left a pile of money on the table – and didn’t even know it. The reason the buyer probably left money on the table is that they more than likely made two critical mistakes without even being aware of it. One mistake was that they didn’t negotiate all five parts of the sale separately. The price of the car is just one part.

On that note, another step you will want to take is to improve your car buying skills. How? Visit websites that provide car buying tips. Another way is to pick up a good book on how to buy a car – you can find quite a few of them out there. Unfortunately, I have not run across any that provide specific information on buying a car after bankruptcy. However, After Bankruptcy Credit Solutions does cover this topic in detail – so the information is out there.

Other than a home, buying a car is one of the bigger purchases you’re going to make. You need to AVOID any mistakes that can cost you up to $100s or $1,000s of dollars in extra interest. In other words, you simply can’t afford not to get things right when you’re buying a car after bankruptcy.

This article covered some steps you can take which could help when buying a car after bankruptcy. Put them to use and they could save you from making some expensive mistakes!

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Discharged Bankruptcy? These Steps Could Help

If you have a discharged bankruptcy, here are three steps that could help increase your chances of qualifying for credit and loans:

1. Order copies of your credit reports

You will want to order copies of your credit reports from the major credit reporting agencies (Experian, Equifax, and Trans Union) after your discharged bankruptcy. You can order your reports by mail, telephone, or online.

You may even be entitled to a free copy of your credit report – check with each of the major credit reporting agencies. In After Bankruptcy Credit Solutions I cover five ways to get a free copy of your credit report. But free or not, ordering copies of your credit reports after your discharged bankruptcy is important if you are planning to apply for any credit or loans.

2. Clean up your credit reports

Once you have copies of your credit reports, you will want to review each one carefully. You will want to make a note of any inaccurate or obsolete negative information that needs to corrected or removed. You will also want to make sure that your discharged bankruptcy is being reported correctly on each credit report.

While there is not enough room here to go into detail on how to correct or remove any inaccurate or obsolete negatvie information on your credit reports, I explain how in After Bankruptcy Solutions – and also what to look for when cleaning up your credit reports after a discharged bankruptcy.

3. Focus on increasing your credit score

Cleaning up your credit reports after a discharged bankruptcy is one way that could help increase your credit score. There are a number of other ways as well including: Establishing some new accounts and paying them in a timely manner over time, maintaining low balances on your credit card accounts, and even adding years of positive credit history to your credit reports.

In this article we looked at three steps that could help increase your chances of qualifying for credit and loans after a discharged bankruptcy. There are a number of other strategies you can use – but I will save those for future articles dealing with credit and loans after a discharged bankruptcy.

Copyright © 2006 Innovative Solutions Publishing, Inc. All rights reserved.

The company and product/service names referenced in this article are the trademarks, registered trademarks or service marks of their respective owners. None of the owners have sponsored or endorsed this article.

DISCLAIMER:

This information is designed to provide only a general overview of the subject matter herein.

This information is provided with the understanding that neither the publisher nor author is engaged in rendering legal, accounting or other professional advice. If legal or other expert assistance is required, the services of a professional should be sought.

Neither the publisher nor author shall be liable for any loss or damages, including but not limited to special, consequential, incidental or other damages, caused by the information contained herein.

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Cash Back

How good would it feel if every time you spent money you got some back? Well that’s what most credit card companies are offering you at the moment, as the big credit card company’s battle out the customers can only benefit, most credit card companies offer an incentive when you open an account, including 0% on balances and purchases for the first 6 or 9 months, which is great but know they are offering Cash Back.

Cash Back works by offering customers money back (typical rate of 0.5% -1%) every time they make a purchase using their credit card, this money is usually put into your account at the end of every month, how good will that make you feel knowing every time you bring your plastic friend out he is making you money.

There are some great offers by credit card companies including American Express Blue Credit Card, they have a great introductory offer of 2% cash back for the first three months, then the rate reduces to 1% this is a great offer from American Express, you could really cash in with this offer. A typical example with American Express Blue credit card, say you spend £1,500 a month with cash back you will receive £30 for the first three months then £15 for every other month.

Other credit card companies getting in on the act include Halifax, Egg, Stanley Morgan and Alliance and Leicester they all offer Cash Back, at a typical rate of 0.5% -1% the only requirement is you spend a certain amount throughout the year.

The only think to watch out for is make sure you pay off your balance when you receive your statement, if you don’t you will lose all the Cash Back money that you have earned, and you’ll be charge more interest and end up paying back a lot more, so you really have to watch that what you’re spending every month you can cover.

As with all credit cards when you’re applying for one make sure you read it carefully, I know we always look for the great benefits that they offer us, but remember a lot of these offers only last for an introductory period, so make sure you check the interest rate as after the first 6 or 9 months you could see it jumping up dramatically, so what could have started out as a great offer turns out to be a nightmare, and leave you in debt for years.

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Finance Your Child’s Education – Stress Free

In 2002, the average annual cost for a public university was $9,338. It is estimated that by 2017, the average annual cost will be $19,413. And that’s just for tuition and credit fees. Let’s not forget about room and board, books, food, clothes and extra activities.

With those figures it mind, it would be wise to start planning for your child’s education today.

You already know about loans and scholarships but those aren’t the only options. You don’t have to go into debt! There are several choices to help you prepare for your child’s future.

529 Plans

A 529 or qualified tuition program is a (federal) tax-free investment plan that allows families to save for their childrens college educations.

Each state has its own 529 plan and you do not have to be a resident of a particular state to invest in that state’s plan.

The 2 types of plans include:

Prepaid Tuition Plans – These plans allow you to pay for your child’s in-state tuition at today’s prices. These accounts are low-risk and they are guaranteed to match or exceed in-state inflation. However, these plans are often limited to state residents and the cost may not be covered if your child decides to attend an in-state private university.

Education Savings Accounts- Or college savings plans are investment accounts whose value fluctuates with the market. They can be used at eligible public and private universities- there are no residency requirements. Additionally, some plans have high contribution limits per beneficiary and you can contribute up to $11,000 per year without paying a gift tax.

Savings Accounts

Even if your child only has a few years until it’s time to go to college, it’s never too late to begin saving. Determine where you can cut costs and put that money into a high-interest savings account.

For example, instead of buying 2 video games as a birthday present, buy one and put the extra money into a savings account. What about Christmas and Hanukkah? Sure, it’s fun to open presents but I guarantee that the novelty of those gifts will soon be forgotten and later on your child will thank you for making sure that their education was financed in a stress-free way.

Here is a tip: look for a FDIC insured bank that is based online. These banks offer higher interest rates because they don’t have the operating overhead of having branches. The work the same way as a regular bank except that there is no physical branch. You deposit money through your current checking account and receive monthly statements either via email or through the mail.

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