|January 12, 2018||0|
Congratulations! You’ve successfully fulfilled your three year period of bankruptcy and have been discharged, so what now? You’ve certainly taken the most suitable actions to settle your financial troubles by declaring bankruptcy, and all your debts are well behind you now. Keep in mind though, there’s still plenty of work required to get your finances back on track. The leading issue that discharged bankrupts confront 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 off 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 a blank page will make financial institutions reluctant in lending money to you purely because they can’t evaluate your repayment habits. Rebuilding your credit rating is the best way to get your finances back on the right track, and make your recovery process as seamless as possible.
How to repair your credit report after discharge?
Considering that financial institutions haven’t had the ability to check your financial management skills for the previous three years, you will want to begin demonstrating healthy financial habits. Here’s a list of ways in which you can do this
1. Regular employment
Securing consistent and ongoing employment is an excellent way to increase your financial security and demonstrate to banks and financial institutions that you have a regular stream of income. Reliable employment will enable you to increase your savings and improve 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 gradually will show lending institutions that you are financially responsible 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 rating.
3. Limit your credit applications
Every time you apply for a line of credit, it is recorded on your credit history, so lots of credit applications can adversely impact your credit rating. After being discharged, it’s critical that you are practical and cautious about the kinds of credit you apply for to increase the likelihood of approval. It’s best to request only one line of credit at once, and keep in mind that secured loans and options with a guarantor or joint accounts will increase the likelihood of approval.
4. Consider a term deposit
If you’ve had the chance to save money during your bankruptcy period, consider putting part of it into a term deposit account. Not only will you accumulate interest and boost your overall financial situation, it will additionally show financial institutions that you are financially dependable. Therefore, the likelihood of acquiring 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 unquestionably improve your credit rating and increase the confidence that lenders have in your financial management skills.
6. Don’t hesitate to speak with financial institutions
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 speak with banks or other financial institutions to review your circumstances. They are in the best position to advise of your eligibility, and give recommendations on what options would work best for your personal 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 report. While some of them are helpful in challenging any incorrect listings on your credit history, 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 expertise in rebuilding your credit history, or have any queries about your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Contact Bankruptcy Dandenong on 1300 818 575, or alternatively you can visit our website for more information: http://www.bankruptcy-dandenong.com.au/