|January 12, 2018||Comments Closed|
Congratulations! You’ve successfully fulfilled your 3 year period of bankruptcy and have been discharged, so now what? You’ve clearly taken the appropriate measures to address your financial problems by declaring bankruptcy, and all your debts are well behind you now. However, there’s still a considerable amount of work required to get your finances back in order. The major issue that discharged bankrupts encounter is their opportunity to borrow money, and the reason for this is their poor credit rating.
For the previous three years, you’ve had no debts to repay so your credit history has nothing to show other than a bankruptcy mark next to your name. There’s been no activity on your credit report, so a blank page will make banks and lenders reluctant in lending money to you purely because they can’t evaluate your repayment behaviours. Rebuilding your credit history is the best way to get your finances back on track, and make your recovery process as seamless as possible.
How you can rebuild your credit report after discharge?
Given that lending institutions haven’t had the ability to inspect your financial management skills for the last three years, you will want to start presenting healthy financial habits. Here’s a list of ways in which you can do this
1. Steady employment
Obtaining regular and ongoing employment is a great way to improve your financial security and show loan providers that you have a regular income stream. Reliable 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 show lending institutions that you are financially sensible and are capable of making loan repayments. By putting money into a specialised savings account each month, even a small amount, will improve your credit rating.
3. Limit your credit applications
Each time you make an application for a line of credit, it is marked on your credit report, so lots of credit applications can adversely affect your credit rating. After being discharged, it’s crucial that you are sensible and mindful about the types of credit you apply for to increase your chances of approval. It’s best to apply for a single line of credit at once, and bear in mind that secured loans and options with a guarantor or joint accounts will increase the probability of approval.
4. Consider a term deposit
If you’ve had the chance to save money throughout your bankruptcy period, think about investing some of it into a term deposit account. Not only will you accrue interest and boost your overall financial circumstances, it will additionally show lending institutions that you are financially dependable. Consequently, 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. Whether it’s your electricity, rent, or even a secured loan in your name, making these repayments on time will definitely improve your credit rating and increase the confidence that lending institutions have in your financial management skills.
6. Don’t be afraid to speak with lenders
If you want to request a line of credit after your bankruptcy period, or discover what types of options are available to you, don’t hesitate to speak to lenders or other financial institutions to review your circumstances. They are in the best position to advise of your eligibility, and give insight on what options would work best for your individual situation.
Beware of credit repair agencies
There are numerous credit repair firms that will make all kinds of promises to improve your credit report. Even though many of them are effective in disbuting any incorrect listings on your credit record, 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 require any support in rebuilding your credit history, or have any inquiries with respect to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Speak with Bankruptcy Maitland on 1300 818 575, or alternatively you can visit our website for more information: http://www.bankruptcy-maitland.com.au/