|January 12, 2018||Comments Closed|
Congratulations! You’ve successfully fulfilled your 3 year period of bankruptcy and have been discharged, so what now? You’ve certainly taken the most appropriate steps to resolve your financial troubles by declaring bankruptcy, and all your debts are well behind you now. Despite 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 repay so your credit history has nothing to show with the exception of a bankruptcy mark against 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 evaluate your repayment behaviours. Repairing your credit history is the best way to get your finances back on track, and make your recovery process as smooth as possible.
Ways to repair your credit report after discharge?
Given that loan providers haven’t had the ability to assess your financial management skills for the previous 3 years, you will want to start illustrating healthy financial habits. Here’s a list of ways in which you can do this
1. Stable employment
Securing reliable and ongoing employment is an excellent way to enhance your financial security and show lending institutions that you have a regular source of income. Stable employment will allow you to increase your savings and bolster your overall financial condition, 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 demonstrate to financial institutions that you are financially responsible 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
Each time you apply for a line of credit, it is recorded on your credit report, so too many credit applications can adversely impact your credit rating. After being discharged, it’s essential that you are practical and careful about the kinds of credit you apply for to increase your chances of approval. It’s best to request only one line of credit at once, and always remember 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 your bankruptcy period, think about investing some of it into a term deposit account. Not only will you accumulate interest and enhance your overall financial position, it will additionally show lending institutions that you are financially responsible. Consequently, the likelihood of securing 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 it’s your electricity, rent, or even a secured loan in your name, making these repayments on time will most certainly improve your credit rating and increase the confidence that lenders have in your financial management capabilities.
6. Don’t be afraid to speak with loan providers
If you want to make an application for a line of credit after your bankruptcy period, or find out what types of options are available to you, don’t hesitate to talk to lenders or other financial institutions to review your circumstances. They are in the best position to advise of your eligibility, and offer insight on what options would work best for your individual circumstances.
Beware of credit repair firms
There are a number of credit repair agencies that will make all sorts of promises to improve your credit record. Even though some of them are effective in disbuting 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 agencies since they “may not always be able to do what they claim they can”.
If you’re in need of any advice in rebuilding your credit report, or have any questions relating to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Call Bankruptcy Lismore on 1300 818 575, or alternatively you can visit our website for additional information: https://www.bankruptcy-lismore.com.au/