Interest rates on loans and credit cards after bankruptcy

Is there credit hope after bankruptcy?

Many people wonder if they will be able to get credit after bankruptcy, and the answer to that is a surprising YES. There are many lenders that cater specifically to people who have been through bankruptcy, but when you see the ridiculously high interest rates on credit card offers, you may wonder if you can do better. This article will give you information about interest rates on loans and credit cards after bankruptcy.

Interest rates on credit cards after bankruptcy

Because credit cards are considered unsecured loans, lenders charge a much higher interest rate because of the risk. After a bankruptcy, lenders consider you very high risk, so you’ll pay the highest interest rate tier, which can range from 22% to 30%. Although this may seem daunting, it will get better with time. Make sure the credit card you choose reports your payment history to the three major credit bureaus. As your payment history improves and your credit score increases, you can apply for cards with lower interest rates. This can take anywhere from 6 months to a couple of years, depending on how many positive business lines you reinstate on your credit report.

Interest Rates on Car Loans and Home Loans After Bankruptcy

Until your credit is restored, you will only be able to get a subprime mortgage and a high interest rate car loan. This can mean significantly higher payments, so it would be wise to wait a couple of years to rebuild your credit. It will be worth it if you factor in the interest savings between someone just out of bankruptcy and someone who has re-established a positive payment history. Start by getting a couple of credit cards designed specifically for people with bad credit. Orchard Bank is a great place to start. Always make your payments on time and use your credit responsibly. As your credit score improves with your new positive payment history, you can move toward cards from more established banks and eventually other loans.