Banks Are Sticking Their Noses Where They Don't Belong

September 2nd, 2009 by Reed Allmand

If you have filled out an application for credit with a bank recently you’ve probably noticed that the banks have made a little change to their bankruptcy question.  Before, banks would ask potential customers if they had filed bankruptcy within the past 10 years. Now, banks are asking potential customers if they have “ever” filed bankruptcy.  Should this be allowed?

After 10 years a bankruptcy is wiped off of the debtor’s credit report–and for good reason.  No one should need to explain or reveal a bankruptcy that happened 10, 20 or even 30 years ago.  What is the intention of banks when they ask “Have you ever filed bankruptcy”?  It does not make good business sense to judge a debtor by a bankruptcy that was over 10 years ago, especially if that debtor has proven that he/she is a good credit risk by paying on time and maintaining a good debt to income ratio.

For those of you who have filed bankruptcy over 10 years ago, don’t be tempted to hide the fact if asked about it.  You don’t ever want to give misleading information on a credit application.  Simply note your bankruptcy and emphasis your current good credit. If they’re smart they will focus on your relevant and current credit history.

About Reed Allmand

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Allmand's vision is rooted in his own financially precarious childhood in Abilene "My father always had difficulty holding a job and supporting our family, so after my parents divorced when I was 12, my sister and I got jobs to help make ends meet," he recalls. "I remember what it felt like as a child to worry that our car would be repossessed or home foreclosed on."

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