|January 12, 2018||Comments Closed|
Congratulations! You’ve successfully served your 3 year period of bankruptcy and have been discharged, so now what? You’ve obviously taken the right steps to settle your financial dilemmas by filing for bankruptcy, and all your debts are well behind you now. Having said this, there’s still a considerable amount of work required to get your finances back in order. The most prevalent issue that discharged bankrupts experience 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 besides a bankruptcy mark next to your name. There’s been no activity on your credit report, so a blank page will make banks and lenders reluctant in lending money to you solely because they can’t evaluate your repayment behaviours. Rebuilding your credit rating is the best way to get your finances back on course, and make your recovery process as smooth as possible.
How you can rebuild your credit report after discharge?
Given that lending institutions haven’t been able to examine your financial management skills for the past 3 years, you have to begin exhibiting healthy financial habits. Here’s a list of ways in which you can do this
1. Steady employment
Acquiring regular and ongoing employment is an excellent way to increase your financial security and demonstrate to lending institutions that you have a regular income stream. Steady employment will enable you to increase your savings and strengthen your overall financial circumstances, leading to a better credit rating.
2. Increase your savings balance
Your savings account is an asset, so increasing your savings balance in time will demonstrate 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 history.
3. Limit your credit applications
Every time you make an application for a line of credit, it is marked on your credit report, so too many credit applications can negatively affect your credit rating. After being discharged, it’s important that you are realistic and vigilant 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 once, and bear in mind that secured loans and options with a guarantor or joint accounts will increase the likelihood of approval.
4. Contemplate a term deposit
If you’ve managed to save money during the course of your bankruptcy period, think about investing some of it into a term deposit account. Not only will you accumulate interest and boost your overall financial circumstances, it will likewise show lenders that you are financially dependable. Consequently, 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 type 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 most certainly improve your credit report and increase the confidence that loan providers have in your financial management capabilities.
6. Don’t hesitate to speak with loan providers
If you intend to apply for a line of credit after your bankruptcy period, or discover what types of options are available to you, don’t be afraid to talk to banks or other financial institutions to discuss your circumstances. They are in the best position to advise of your eligibility, and give recommendations on what options would work best for your individual situation.
Be careful with credit repair agencies
There are a number of credit repair companies that will make all sorts of promises to improve your credit report. While some 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 require any advice in repairing your credit history, or have any questions with respect to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Phone Bankruptcy Northern Rivers on 1300 818 575, or alternatively you can visit our website for further information: https://www.bankruptcy-northernrivers.com.au/