|January 12, 2018||Comments Closed|
Congratulations! You’ve successfully served your three year period of bankruptcy and have been discharged, so what now? You’ve unquestionably taken the most suitable actions to deal with your financial challenges by filing for bankruptcy, and all your debts are well behind you now. Having said this, there’s still a good deal of work involved to get your finances back in order. The main issue that discharged bankrupts encounter is their capability to borrow money, and the reason for this is their bad credit rating.
For the previous 3 years, you’ve had no debts to pay back so your credit history has nothing to show with the exception of a bankruptcy mark next to your name. There’s been no activity on your credit report, so an empty page will make lenders hesitant in lending money to you simply because they can’t assess your repayment behaviours. Repairing your credit history is the best way to get your finances back on track, and make your recovery process as seamless as possible.
Ways to rebuild your credit report after discharge?
Since lending institutions haven’t been able to check your financial management skills for the past three years, you will need to start demonstrating healthy financial habits. Here’s a list of ways in which you can do this
1. Steady employment
Attaining steady and ongoing employment is an effective way to boost your financial security and show lending institutions that you have a regular income source. Reliable employment will enable you to increase your savings and bolster your overall financial situation, resulting in a better credit rating.
2. Increase your savings balance
Your savings account is an asset, so increasing your savings balance as time go on will display to loan providers that you are financially sensible and are capable of making loan repayments. By putting money into a specialised savings account every month, even a small amount, will improve your credit history.
3. Limit your credit applications
Every time you request a line of credit, it is registered on your credit report, so too many credit applications can negatively impact your credit rating. After being discharged, it’s critical that you are practical and vigilant about the types of credit you apply for to increase the likelihood of approval. It’s best to make an application for a single line of credit at once, and bear in mind that secured loans and options with a guarantor or joint accounts will increase the likelihood of approval.
4. Consider a term deposit
If you’ve been able to save money during the course of your bankruptcy period, contemplate investing part of it into a term deposit account. Not only will you accumulate interest and enhance your overall financial situation, it will additionally show financial institutions that you are financially reliable. As a result, your chances of acquiring a loan will be increased which leads to an improved credit rating.
5. Always make repayments on time
One of the most important things you can do as a discharged bankrupt is to make any kind of repayment on time. Regardless if it’s your electricity, rent, or even a secured loan in your name, making these repayments on time will most definitely improve your credit history and increase the confidence that financial institutions have in your financial management skills.
6. Don’t be afraid to talk with loan providers
If you intend to request a line of credit after your bankruptcy period, or discover what types of options are available to you, don’t be reluctant to speak to banks or other financial institutions to review your circumstances. They are in the best position to advise of your eligibility, and offer information on what options would work best for your personal situation.
Be cautious of credit repair agencies
There are a lot of credit repair agencies that will make all kinds of promises to improve your credit record. Although many of them are useful in challenging any incorrect listings on your credit history, they may not be able to do anything else to improve your credit record. The Government’s MoneySmart website (https://www.moneysmart.gov.au/) advises discharged bankrupts to be “very careful” of these firms because they “may not always be able to do what they claim they can”.
If you need any expertise in repairing your credit history, or have any questions with respect to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Reach out to Bankruptcy Mildura on 1300 818 575, or alternatively you can visit our website for further information: http://www.bankruptcy-mildura.com.au/