|January 12, 2018||Comments Closed|
Congratulations! You’ve successfully fulfilled your 3 year period of bankruptcy and have been discharged, so now what? You’ve obviously taken the most appropriate actions to deal with your financial problems by filing for bankruptcy, and all your debts are well behind you now. However, there’s still a lot of work required to get your finances back in order. The biggest issue that discharged bankrupts face is their capability to borrow money, and the main reason for this is their poor credit rating.
For the previous three years, you’ve had no debts to pay off so your credit history has nothing to show except for a bankruptcy mark next to your name. There’s been no movement on your credit report, so an empty page will make lenders reluctant in lending money to you simply because they can’t ascertain your repayment behaviours. Rebuilding your credit history is the best way to get your finances back on course, and make your recovery process as seamless as possible.
Ways to repair your credit report after discharge?
Given that lending institutions haven’t had the ability to evaluate your financial management skills for the last 3 years, you have to start demonstrating healthy financial habits. Here’s a list of ways in which you can do this
1. Stable employment
Achieving stable and ongoing employment is a fantastic way to boost your financial security and display to loan providers that you have a regular stream of income. Stable employment will allow you to increase your savings and strengthen 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 with time will demonstrate to financial institutions that you are financially dependable and are capable of making loan repayments. By transferring money into a dedicated savings account every month, even a small amount, will improve your credit rating.
3. Limit your credit applications
Whenever you apply for a line of credit, it is documented on your credit report, so too many credit applications can adversely affect your credit rating. After being discharged, it’s vital that you are realistic and careful about the types of credit you apply for to increase your chances of approval. It’s best to request a single line of credit at once, and always 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 had the opportunity to save money during your bankruptcy period, think about investing part of it into a term deposit account. Not only will you accrue interest and boost your overall financial position, it will also show lenders that you are financially responsible. 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 definitely improve your credit rating and increase the confidence that lenders have in your financial management abilities.
6. Don’t be afraid to speak with lending 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 be reluctant to speak to banks or other financial institutions to review your circumstances. They are in the best position to advise of your eligibility, and provide information on what options would work best for your individual situation.
Be cautious of credit repair agencies
There are lots of credit repair companies that will make all sorts of promises to improve your credit report. Whilst many of them are effective in challenging any incorrect listings on your credit history, 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 companies due to the fact that they “may not always be able to do what they claim they can”.
If you require any expertise in rebuilding your credit history, or have any inquiries relating to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Reach out to Bankruptcy Port Macquarie on 1300 818 575, or alternatively you can visit our website for further information: https://www.bankruptcy-portmacquarie.com.au/