Bankruptcy Damage

• Bankruptcy is the worst entry that can hit your credit report. Your credit score plummets, and every account listed in the bankruptcy will show you filed bankruptcy and you will have the bankruptcy listed in the legal portion of your credit report. Creditors almost always review your credit report and score in conjunction with lending money. The newer a bankruptcy is, the more difficult it will be to obtain a new loan or refinance an existing loan. The creditor is unable to see if you have truly turned your financial situation around until some time has passed and new, positive credit begins to report to the credit bureau. Having substantial equity in your home may improve your chances of refinancing.
  
  

Time

• To get the best interest and monthly payment available for your refinance, you need to allow time to pass. You need to work hard to establish positive reporting and let your credit score improve. Finding a lender immediately following bankruptcy is not impossible, but you will pay more for the loan. A creditor will charge more interest due to the risk. Spending time rebuilding your credit before attempting to refinance any loan is advisable.
  
  

Rebuild Credit

• Continue to make all the payments on the debt that survived bankruptcy. This may be your auto loan or mortgage or other loan. Do not be late on any payment. Get one or two secured credit cards from a company that reports to all three of the credit agencies. Keep the balance as low as possible and do not miss a payment.
  
  

Refinance

• Shop around all available lenders and compare all terms of the loan. Attempting to refinance right out of bankruptcy may limit you to only subprime lenders. The longer you wait and the more your credit score recovers, your bankruptcy becomes more an issue of the past, and creditors will instead begin to focus on your present and see how you have been handling your recent debt. Look closely at the monthly payment, interest and the length of time. A payment that appears lower may actually cost you more in the long run if the number of years in repayment is greater.