|January 12, 2018||Comments Closed|
Congratulations! You’ve successfully fulfilled your three year period of bankruptcy and have been discharged, so what now? You’ve certainly taken the right measures to address your financial challenges by filing for bankruptcy, and all your debts are well behind you now. Despite this, there’s still a lot of work involved to get your finances back on track. The most significant issue that discharged bankrupts confront is their capability to borrow money, and the reason for this is their poor credit rating.
For the previous 3 years, you’ve had no debts to pay off so your credit history has nothing to show with the exception of a bankruptcy mark next to your name. There’s been no movement on your credit report, so an empty page will make financial institutions hesitant in lending money to you only because they can’t ascertain your repayment behaviours. Repairing your credit history is the best way to get your finances back in order, and make your recovery process as seamless as possible.
Ways to rebuild your credit report after discharge?
Considering that loan providers haven’t had the ability to examine your financial management skills for the previous 3 years, you need to start illustrating healthy financial habits. Here’s a list of ways in which you can do this
1. Steady employment
Securing stable and ongoing employment is an excellent way to enhance your financial security and display to financial institutions that you have a regular source of income. Stable employment will enable you to increase your savings and bolster your overall financial condition, resulting in a better credit rating.
2. Increase your savings balance
Your savings account is an asset, so increasing your savings balance gradually will show lending institutions that you are financially sensible and are capable of making loan repayments. By putting money into a specialised savings account each month, even a small amount, will improve your credit history.
3. Limit your credit applications
Each time you make an application for a line of credit, it is documented on your credit report, so too many credit applications can negatively impact your credit history. After being discharged, it’s very important that you are sensible and cautious about the types of credit you apply for to increase the likelihood of approval. It’s best to request just one line of credit at once, and keep in mind that secured loans and options with a guarantor or joint accounts will increase the chances of approval.
4. Contemplate a term deposit
If you’ve had the chance to save money throughout your bankruptcy period, think about investing part of it into a term deposit account. Not only will you accrue interest and enhance your overall financial situation, it will likewise show financial institutions that you are financially responsible. Therefore, the likelihood of securing 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 type of repayment on time. Whether or not it’s your electricity, rent, or even a secured loan in your name, making these repayments on time will most certainly improve your credit rating and increase the confidence that lending institutions have in your financial management skills.
6. Don’t be afraid to talk to lenders
If you wish to request a line of credit after your bankruptcy period, or identify what types of options are available to you, don’t hesitate to talk to banks or other financial institutions to discuss your situation. They are in the best position to advise of your eligibility, and offer recommendations on what options would work best for your personal situation.
Be mindful of credit repair companies
There are a lot of credit repair firms that will make all sorts of promises to improve your credit record. While many of them are reliable in challenging any incorrect listings on your credit record, 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 companies since they “may not always be able to do what they claim they can”.
If you need any help and support in repairing your credit report, or have any inquiries relating to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Get in touch with Bankruptcy Port Stephens on 1300 818 575, or alternatively you can visit our website for further information: https://www.bankruptcy-portstephens.com.au/