by Dell Claiborne
I claimed bankruptcy eight years ago. Since then, I have made real sacrifices and educated myself about money management. I have been at the same job for five years and have saved up a substantial amount of money. I would like to begin looking at houses to buy. But how will my credit history affect my ability to qualify for a loan?
Bankruptcy can be a tough ordeal, so congratulations on coming out of it more educated about managing your money and in a position to grow and be successful. Not knowing exactly which type of bankruptcy that you filed, I will assume it was either Chapter 7 or Chapter 13, which are the two most common. Chapter 13 is more commonly used to prevent loss of property or homes. A bankruptcy on your credit history is one of the largest negatives that can occur. That being said, it isn’t the end of the world. It’s a setback and should be treated as such. Your credit score has been affected, but you’re also in a position to continue to correct the negative. I assume in the eight years since filing for bankruptcy you haven’t been delinquent paying any other bills and worked to pay off past debts. In doing that you slowly strengthened your credit. So your ability to qualify for a loan hasn’t been completely compromised. In my opinion, the worst case scenario is that you end up paying a slightly higher interest rate based on your current credit score. I also feel that those effects will be minimal based on the amount of time since your bankruptcy and current stable financial situation. I am not a mortgage broker or banker and you should sit down with a professional for more detailed answers and get prequalified before you contact your Realtor and begin your home search. If you’re not ready to meet with a lender, you can also get a free copy of your credit report by visiting www.annualcreditreport.com. The site is free and easy to use. Our current market is ripe with lots of inventory for you to choose from and interest rates remain at historic lows. Good luck with your home search.
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