|January 12, 2018||Comments Closed|
Congratulations! You’ve successfully served your 3 year period of bankruptcy and have been discharged, so what now? You’ve clearly taken the most appropriate actions to address your financial difficulties by filing for bankruptcy, and all your debts are well behind you now. However, there’s still plenty of work involved to get your finances back on track. The biggest issue that discharged bankrupts confront is their ability to borrow money, and the reason for this is their bad credit rating.
For the last three years, you’ve had no debts to repay so your credit history has nothing to show except for a bankruptcy mark against your name. There’s been no movement on your credit report, so a blank page will make banks and lenders reluctant in lending money to you simply because they can’t inspect your repayment behaviours. Rebuilding your credit rating is the best way to get your finances back on track, and make your recovery process as seamless as possible.
Ways to repair your credit report after discharge?
Considering that lenders haven’t had the ability to evaluate your financial management skills for the previous three years, you need to start presenting healthy financial habits. Here’s a list of ways in which you can do this
1. Reliable employment
Obtaining reliable and ongoing employment is a fantastic way to enhance your financial security and show financial institutions that you have a regular income stream. Stable employment will enable you to increase your savings and bolster your overall financial circumstances, leading to a better credit rating.
2. Increase your savings balance
Your savings account is an asset, so increasing your savings balance over time will illustrate to financial institutions that you are financially sensible and are capable of making loan repayments. By transferring money into a dedicated savings account every month, even a small amount, will improve your credit history.
3. Limit your credit applications
Every time you apply for a line of credit, it is documented on your credit report, so excessive credit applications can negatively impact your credit rating. After being discharged, it’s critical that you are realistic and cautious about the kinds of credit you apply for to increase the likelihood of approval. It’s best to make an application for only one line of credit at once, and remember that secured loans and options with a guarantor or joint accounts will increase the probability of approval.
4. Contemplate a term deposit
If you’ve managed to save money throughout your bankruptcy period, consider investing some of it into a term deposit account. Not only will you accrue interest and boost your overall financial circumstances, it will additionally show lending institutions that you are financially responsible. Consequently, the likelihood of obtaining 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 of whether it’s your rent, electricity, or even a secured loan in your name, making these repayments on time will certainly improve your credit rating and increase the confidence that loan providers have in your financial management abilities.
6. Don’t be afraid to talk with lenders
If you wish to make an application for a line of credit after your bankruptcy period, or discover what types of options are available to you, don’t hesitate to talk to lenders or other financial institutions to review your circumstances. They are in the best position to advise of your eligibility, and give advice on what options would work best for your personal circumstances.
Be mindful of credit repair agencies
There are a number of credit repair companies that will make all kinds of promises to improve your credit record. While some of them are useful in disbuting any incorrect listings on your credit history, they may not be able to do anything else to improve your credit report. The Government’s MoneySmart website (https://www.moneysmart.gov.au/) advises discharged bankrupts to be “very careful” of these companies due to the fact that they “may not always be able to do what they claim they can”.
If you require any support in rebuilding your credit report, or have any concerns concerning your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Call Bankruptcy Geraldton on 1300 818 575, or alternatively you can visit our website for additional information: http://www.bankruptcy-geraldton.com.au/