|January 12, 2018||Comments Closed|
Congratulations! You’ve successfully served your three year period of bankruptcy and have been discharged, so now what? You’ve unquestionably taken the most suitable measures to settle your financial issues by declaring bankruptcy, and all your debts are well behind you now. Having said this, there’s still plenty of work required to get your finances back in order. The most prevalent issue that discharged bankrupts face 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 repay so your credit history has nothing to show other than a bankruptcy mark next to your name. There’s been no movement on your credit report, so an empty page will make lenders hesitant in lending money to you only because they can’t ascertain your repayment behaviours. Repairing your credit rating 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?
Given that lenders haven’t had the ability to check your financial management skills for the last three years, you need to begin displaying healthy financial habits. Here’s a list of ways in which you can do this
1. Stable employment
Obtaining stable and ongoing employment is an effective way to improve your financial security and display to lenders that you have a regular income stream. Regular employment will enable you to increase your savings and strengthen your overall financial situation, 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 responsible 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
Each time you request a line of credit, it is documented on your credit report, so too many credit applications can negatively affect your credit history. After being discharged, it’s integral that you are sensible and cautious about the kinds of credit you apply for to increase the likelihood of approval. It’s best to request 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 probability of approval.
4. Consider a term deposit
If you’ve been able to save money during your bankruptcy period, contemplate putting some of it into a term deposit account. Not only will you accumulate interest and improve your overall financial position, it will also show financial institutions that you are financially responsible. Therefore, your chances 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. Whether or not it’s your rent, electricity, or even a secured loan in your name, making these repayments on time will definitely improve your credit history and increase the confidence that financial institutions have in your financial management capabilities.
6. Don’t hesitate to speak with financial institutions
If you want to make an application for a line of credit after your bankruptcy period, or identify what types of options are available to you, don’t hesitate to speak with banks or other financial institutions to review your situation. They are in the best position to advise of your eligibility, and provide suggestions on what options would work best for your personal situation.
Be cautious of credit repair companies
There are numerous credit repair companies that will make all kinds of promises to improve your credit report. Even though some of them are effective in disbuting any incorrect listings on your credit record, 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 firms due to the fact that they “may not always be able to do what they claim they can”.
If you need any advice in rebuilding your credit report, or have any inquiries relating to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Talk to Bankruptcy Shepparton on 1300 818 575, or alternatively you can visit our website for additional information: http://www.bankruptcy-shepparton.com.au/