Bankruptcy is devastating because it puts all of your life plans on hold for quite a while. Getting a new loan, approved for new credit cards, or even renting a new apartment may pose challenging. But what about a house? Many Americans wonder how many years they must wait until they can submit a loan application to purchase a home.
The exact amount of time depends on many factors, so it is actually very difficult to say. Some may bounce back faster than others and be able to get approved sooner. The most important thing you can do in this situation to get back in the game is to get your credit score straight. While it does take about a decade for the bankruptcy to fall off of your credit report, that doesn’t necessarily mean that it can or will take ten years for you to be approved for a new loan.
Be sure that you monitor your credit scores from the three credit bureaus, which are Transunion, Equifax, and Experian. You should always be monitoring your credit report to be sure that no one is using your identity. You may have to start brand new with your credit by getting a secured credit card in order to prove to the banks over time that have learned to manage your finances in a responsible manner. This is actually the fastest way toward re-building your credit.
There are two different types of bankruptcy filings; these are Chapter 7 and Chapter 13. Borrowers who have filed Chapter 13 bankruptcy are usually able to apply for a government-backed loan after about a year and a half, assuming they meet specific requirements. Be realistic when looking to apply for the home loan.
Just because enough time has passed doesn’t mean you’re ready. Aside from the fact, that applying too early will ding your score again by five points! Do you have a job? Did you previously pay off a loan? Have most of your inquiries fallen off of your report?
Look honestly at all of the documents and decide if you feel you’d be a good candidate for a loan before you go to the bank. The most important goal here is to not let yourself get too down, as there is always hope that you’ll be able to buy a new house after filing for bankruptcy if you are willing to be patient and do the work.