|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 definitely taken the right actions to settle 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 involved to get your finances back on the right track. The greatest issue that discharged bankrupts encounter is their ability to borrow money, and the reason for this is their bad credit rating.
For the previous three 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 activity on your credit report, so a blank page will make lending institutions reluctant in lending money to you only because they can’t assess your repayment habits. Rebuilding your credit history is the best way to get your finances back on the right track, and make your recovery process as seamless as possible.
How to rebuild your credit report after discharge?
Considering that financial institutions haven’t been able to assess your financial management skills for the last three years, you will want to start presenting healthy financial habits. Here’s a list of ways in which you can do this
1. Stable employment
Acquiring regular and ongoing employment is an effective way to increase your financial security and display to financial institutions that you have a regular stream 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 illustrate to financial institutions that you are financially dependable 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
Every time you make an application for a line of credit, it is registered on your credit report, so lots of credit applications can negatively impact your credit rating. After being discharged, it’s critical that you are pragmatic and vigilant 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 a time, and bear in mind that secured loans and options with a guarantor or joint accounts will increase the chances of approval.
4. Think about a term deposit
If you’ve been able to save money throughout your bankruptcy period, consider investing some of it into a term deposit account. Not only will you accrue interest and strengthen your overall financial situation, it will additionally show loan providers that you are financially responsible. 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 type 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 evidently improve your credit rating and increase the confidence that lenders have in your financial management skills.
6. Don’t hesitate to talk to lenders
If you wish to make an application for a line of credit after your bankruptcy period, or explore what types of options are available to you, don’t be afraid to speak with lenders or other financial institutions to review your situation. They are in the best position to advise of your eligibility, and give advice on what options would work best for your individual circumstances.
Be cautious of credit repair firms
There are lots of credit repair agencies that will make all sorts of promises to improve your credit report. Although many of them are helpful in disbuting 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 expertise in repairing your credit history, or have any questions about your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Reach out to Bankruptcy Ipswich on 1300 818 575, or alternatively you can visit our website for more information: http://www.bankruptcy-ipswich.com.au/