|January 12, 2018||0|
Congratulations! You’ve successfully served your 3 year period of bankruptcy and have been discharged, so now what? You’ve unquestionably taken the right measures to deal with your financial difficulties by filing for bankruptcy, and all your debts are well behind you now. Having said this, there’s still a considerable amount of work involved to get your finances back on track. 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 back so your credit history has nothing to show except for a bankruptcy mark next to your name. There’s been no activity on your credit report, so an empty page will make banks and lenders hesitant in lending money to you only because they can’t assess your repayment habits. Repairing your credit history is the best way to get your finances back on track, and make your recovery process as smooth as possible.
How to repair your credit report after discharge?
Since lending institutions haven’t had the ability to assess your financial management skills for the past three years, you will need to start showing healthy financial habits. Here’s a list of ways in which you can do this
1. Regular employment
Attaining steady and ongoing employment is a terrific way to boost your financial security and demonstrate to lenders that you have a regular income stream. Steady employment will enable you to increase your savings and enhance your overall financial circumstances, resulting in a better credit rating.
2. Increase your savings balance
Your savings account is an asset, so increasing your savings balance over time will show lenders that you are financially reliable and are capable of making loan repayments. By putting money into a dedicated savings account every 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 recorded on your credit report, so lots of credit applications can adversely affect your credit history. After being discharged, it’s essential that you are sensible and careful about the kinds of credit you apply for to increase the likelihood of approval. It’s best to make an application for just one line of credit at a time, and remember that secured loans and options with a guarantor or joint accounts will increase the likelihood of approval.
4. Think about a term deposit
If you’ve managed to save money throughout your bankruptcy period, contemplate putting part of it into a term deposit account. Not only will you accumulate interest and improve your overall financial circumstances, it will likewise show lenders that you are financially dependable. Subsequently, 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 of whether it’s your electricity, rent, or even a secured loan in your name, making these repayments on time will evidently improve your credit history and increase the confidence that lending institutions have in your financial management skills.
6. Don’t hesitate to speak to financial institutions
If you intend to apply for a line of credit after your bankruptcy period, or uncover what types of options are available to you, don’t hesitate 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 insight on what options would work best for your individual situation.
Be mindful of credit repair companies
There are a number of credit repair agencies that will make all kinds of promises to improve your credit record. Whilst 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 firms since they “may not always be able to do what they claim they can”.
If you require any assistance in rebuilding your credit history, or have any queries with respect to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Get in contact with Bankruptcy Dubbo on 1300 818 575, or alternatively you can visit our website for further information: http://www.bankruptcy-dubbo.com.au/