|January 12, 2018||0|
Congratulations! You’ve successfully fulfilled your three year period of bankruptcy and have been discharged, so now what? You’ve obviously taken the most appropriate steps to address your financial challenges by filing for bankruptcy, and all your debts are well behind you now. Keep in mind though, there’s still plenty of work required to get your finances back in order. The leading issue that discharged bankrupts confront is their ability to borrow money, and the main reason for this is their bad credit rating.
For the past 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 activity on your credit report, so a blank page will make lending institutions hesitant in lending money to you solely because they can’t inspect your repayment habits. Rebuilding your credit rating is the best way to get your finances back on the right track, and make your recovery process as smooth as possible.
The best ways to repair your credit report after discharge?
Given that lending institutions haven’t had the ability to ascertain your financial management skills for the last 3 years, you will want to start showing healthy financial habits. Here’s a list of ways in which you can do this
1. Regular employment
Attaining regular and ongoing employment is a fantastic way to increase your financial security and show lending institutions that you have a regular source of income. Regular employment will enable you to increase your savings and enhance 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 in time will display to financial institutions that you are financially sensible and are capable of making loan repayments. By putting money into a dedicated savings account each month, even a small amount, will improve your credit rating.
3. Limit your credit applications
Whenever you make an application for a line of credit, it is marked on your credit history, so excessive credit applications can adversely affect your credit history. After being discharged, it’s important that you are sensible and vigilant about the kinds of credit you apply for to increase your chances of approval. It’s best to apply 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 chances of approval.
4. Contemplate a term deposit
If you’ve managed to save money throughout your bankruptcy period, think about investing part of it into a term deposit account. Not only will you accumulate interest and strengthen your overall financial situation, it will also show lenders that you are financially sensible. Therefore, the likelihood 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 undoubtedly improve your credit report and increase the confidence that loan providers have in your financial management abilities.
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 afraid to talk with banks or other financial institutions to discuss your circumstances. They are in the best position to advise of your eligibility, and offer advice 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 report. Whilst some of them are useful 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 guidance in repairing your credit history, or have any questions regarding your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Get in touch with Bankruptcy Emerald on 1300 818 575, or alternatively you can visit our website for additional information: http://www.bankruptcy-emerald.com.au/