|January 12, 2018||0|
Congratulations! You’ve successfully served your three year period of bankruptcy and have been discharged, so what now? You’ve unquestionably taken the appropriate measures to settle your financial issues by declaring bankruptcy, and all your debts are well behind you now. Despite this, there’s still a good deal of work required to get your finances back on track. The main issue that discharged bankrupts experience is their capability to borrow money, and the reason for this is their poor credit rating.
For the last 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 activity on your credit report, so an empty page will make lenders 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 course, and make your recovery process as smooth as possible.
How to repair your credit report after discharge?
Due to the fact that lending institutions haven’t been able to inspect your financial management skills for the past three years, you need to start demonstrating healthy financial habits. Here’s a list of ways in which you can do this
1. Reliable employment
Attaining reliable and ongoing employment is an excellent way to improve your financial security and display to banks and financial institutions that you have a regular source of income. Stable employment will allow 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 over time will demonstrate to loan providers 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
Every time you apply for a line of credit, it is registered on your credit report, so lots of credit applications can negatively affect your credit history. After being discharged, it’s important that you are realistic and vigilant about the kinds of credit you apply for to increase the likelihood of approval. It’s best to make an application for 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 been able to save money throughout your bankruptcy period, think about putting part of it into a term deposit account. Not only will you accumulate interest and boost your overall financial situation, it will also 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. Regardless of whether it’s your rent, electricity, or even a secured loan in your name, making these repayments on time will certainly improve your credit history and increase the confidence that financial institutions have in your financial management skills.
6. Don’t be afraid to speak to lenders
If you intend to make an application for a line of credit after your bankruptcy period, or discover what types of options are available to you, don’t be reluctant to talk with lenders 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 personal circumstances.
Be mindful of credit repair companies
There are a number of credit repair companies that will make all sorts of promises to improve your credit record. While many 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 agencies due to the fact that they “may not always be able to do what they claim they can”.
If you need any guidance in repairing 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 Frankston on 1300 818 575, or alternatively you can visit our website for more information: http://www.bankruptcy-frankston.com.au/