Avoiding Sub-prime LendersMany debtors are surprised that after their bankruptcy is discharged they find themselves receiving many credit offers.  Credit card companies, car loan lenders and even mortgage finance companies will send post-bankruptcy debtors credit offers hoping to capitalize on their clean financial slate.  But beware; many of these creditors are subprime lenders who prey on people just out of bankruptcy who are trying to improve their credit.

Tips on how to avoid subprime lenders:

  1. Check your credit report.  A few months after bankruptcy, your credit report should accurately reflect that that all of you dischargeable debts are actually discharged.  If you find that your credit report is not showing a debt discharged, please contact your credit bureau to have them correct the error. An accurate report may improve your credit score and attract higher quality lenders.
  2. Take small steps to improve your credit rating by paying all of your current bills on time. Mortgage/rent, car notes and any other bills that survived your bankruptcy must be paid in a timely manner so that this new good payment history will be reflected on your credit report. A good payment history will give you more leverage when negotiating with lenders.
  3. Find a good secured credit card so that you can create a new history of revolving credit access.  Remember to use and pay this credit card off every month.  Do not get sucked into relying on this new credit card as a regular source of cash.  Only use the card sparingly. With this new credit card procured after bankruptcy, you can demonstrate to future lenders your willingness to properly manage a revolving credit line.
  4. Read the fine print.  Before applying for a new line of credit, carefully read the terms and conditions.  Some credit offers which appear like good deals on the surface actually have outrageous fees and conditions attached.