|January 12, 2018||Comments Closed|
Congratulations! You’ve successfully served your 3 year period of bankruptcy and have been discharged, so what now? You’ve certainly taken the most suitable measures to address your financial challenges by declaring bankruptcy, and all your debts are well behind you now. Keep in mind though, there’s still a good deal of work required to get your finances back in order. The major issue that discharged bankrupts experience is their ability to borrow money, and the main reason for this is their bad credit rating.
For the previous three years, you’ve had no debts to pay off so your credit history has nothing to show other than a bankruptcy mark against your name. There’s been no activity on your credit report, so a blank page will make lenders hesitant in lending money to you purely because they can’t inspect your repayment behaviours. Repairing your credit rating is the best way to get your finances back in order, and make your recovery process as seamless as possible.
How to rebuild your credit report after discharge?
Given that lenders haven’t been able to check your financial management skills for the past 3 years, you will need to begin presenting healthy financial habits. Here’s a list of ways in which you can do this
1. Stable employment
Obtaining reliable and ongoing employment is an effective way to improve your financial security and show banks and financial institutions that you have a regular stream of income. Stable employment will allow you to increase your savings and improve 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 gradually will illustrate to loan providers that you are financially sensible 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 history.
3. Limit your credit applications
Whenever you apply for a line of credit, it is marked on your credit history, so lots of credit applications can negatively impact your credit rating. After being discharged, it’s important that you are practical and careful about the types of credit you apply for to increase your chances of approval. It’s best to apply for only one line of credit at a time, and always remember that secured loans and options with a guarantor or joint accounts will increase the chances of approval.
4. Consider a term deposit
If you’ve been able to save money during your bankruptcy period, consider investing part of it into a term deposit account. Not only will you accrue interest and improve your overall financial position, it will additionally show lending institutions that you are financially responsible. 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. Regardless if it’s your rent, electricity, or even a secured loan in your name, making these repayments on time will most definitely improve your credit history and increase the confidence that lenders have in your financial management skills.
6. Don’t hesitate to speak with loan providers
If you intend to request a line of credit after your bankruptcy period, or find out what types of options are available to you, don’t hesitate to talk with banks or other financial institutions to review your situation. They are in the best position to advise of your eligibility, and provide recommendations on what options would work best for your individual circumstances.
Be mindful of credit repair agencies
There are loads of credit repair firms that will make all kinds of promises to improve your credit record. Although some of them are useful in disbuting 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 companies due to the fact that they “may not always be able to do what they claim they can”.
If you’re in need of any guidance in repairing your credit report, or have any queries regarding your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Reach out to Bankruptcy Wollongong on 1300 818 575, or alternatively you can visit our website for further information: http://www.bankruptcy-wollongong.com.au/