|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 undoubtedly taken the right measures 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 required to get your finances back on the right track. The most prevalent issue that discharged bankrupts encounter is their ability to borrow money, and the reason for this is their poor credit rating.
For the last 3 years, you’ve had no debts to pay off so your credit history has nothing to show besides a bankruptcy mark next to your name. There’s been no movement on your credit report, so a blank page will make financial institutions reluctant in lending money to you simply because they can’t assess your repayment behaviours. Rebuilding your credit history is the best way to get your finances back on track, and make your recovery process as smooth as possible.
How you can repair your credit report after discharge?
Due to the fact that lenders haven’t had the ability to inspect your financial management skills for the last 3 years, you need to start presenting healthy financial habits. Here’s a list of ways in which you can do this
1. Regular employment
Obtaining reliable and ongoing employment is a terrific way to increase your financial security and demonstrate to financial institutions that you have a regular income stream. Regular employment will allow you to increase your savings and bolster your overall financial condition, 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 lending institutions that you are financially dependable 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
Whenever you request a line of credit, it is recorded on your credit history, so excessive credit applications can negatively affect your credit rating. After being discharged, it’s critical that you are sensible and careful about the kinds of credit you apply for to increase your chances of approval. It’s best to make an application for a single line of credit at a time, and remember that secured loans and options with a guarantor or joint accounts will increase the probability of approval.
4. Think about a term deposit
If you’ve been able to save money during your bankruptcy period, consider putting some of it into a term deposit account. Not only will you accrue interest and strengthen your overall financial circumstances, it will likewise show lending institutions that you are financially sensible. As a result, 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 type of repayment on time. Regardless if it’s your rent, electricity, or even a secured loan in your name, making these repayments on time will unquestionably improve your credit rating and increase the confidence that loan providers have in your financial management skills.
6. Don’t be afraid to speak with lending institutions
If you want to request a line of credit after your bankruptcy period, or find out what types of options are available to you, don’t be reluctant to speak with lenders or other financial institutions to discuss your situation. They are in the best position to advise of your eligibility, and give insight on what options would work best for your individual situation.
Be careful with credit repair agencies
There are a number of credit repair agencies that will make all kinds of promises to improve your credit record. Even though many of them are effective 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 firms because they “may not always be able to do what they claim they can”.
If you’re in need of any advice in rebuilding your credit history, or have any inquiries with respect to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Reach out to Bankruptcy Whitsundays on 1300 818 575, or alternatively you can visit our website for further information: http://www.bankruptcy-whitsundays.com.au/