|January 12, 2018||Comments Closed|
Congratulations! You’ve successfully fulfilled your three year period of bankruptcy and have been discharged, so what now? You’ve undoubtedly taken the most suitable actions to address your financial dilemmas by filing for bankruptcy, and all your debts are well behind you now. Bear in mind though, there’s still plenty of work required to get your finances back on the right track. The most challenging issue that discharged bankrupts experience is their ability to borrow money, and the main reason for this is their poor credit rating.
For the previous 3 years, you’ve had no debts to pay off so your credit history has nothing to show except for a bankruptcy mark against your name. There’s been no activity on your credit report, so an empty page will make banks and lenders reluctant in lending money to you purely because they can’t inspect your repayment habits. Rebuilding your credit history is the best way to get your finances back on the right track, and make your recovery process as seamless as possible.
The best ways to rebuild your credit report after discharge?
Considering that lending institutions haven’t had the ability to evaluate your financial management skills for the previous three years, you will need to start showing healthy financial habits. Here’s a list of ways in which you can do this
1. Steady employment
Securing reliable and ongoing employment is an excellent way to enhance your financial security and demonstrate to banks and financial institutions that you have a regular income stream. Stable employment will allow you to increase your savings and enhance your overall financial situation, resulting in a better credit rating.
2. Increase your savings balance
Your savings account is an asset, so increasing your savings balance with time will show lending institutions that you are financially dependable 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
Whenever you make an application for a line of credit, it is marked on your credit report, so too many credit applications can negatively impact your credit rating. After being discharged, it’s critical that you are pragmatic and vigilant about the kinds of credit you apply for to increase the likelihood of approval. It’s best to apply for just 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. Think about a term deposit
If you’ve had the opportunity to save money during your bankruptcy period, think about investing some of it into a term deposit account. Not only will you accrue interest and improve your overall financial position, it will additionally show lenders that you are financially responsible. Consequently, your chances 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. Regardless if it’s your rent, electricity, or even a secured loan in your name, making these repayments on time will unquestionably improve your credit history and increase the confidence that lending institutions have in your financial management skills.
6. Don’t be afraid to speak with lenders
If you wish to request a line of credit after your bankruptcy period, or find out what types of options are available to you, don’t be afraid 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 information on what options would work best for your personal situation.
Beware of credit repair firms
There are lots of credit repair firms that will make all sorts of promises to improve your credit report. Even though some of them are useful in challenging 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 firms due to the fact that they “may not always be able to do what they claim they can”.
If you require any advice in rebuilding your credit history, or have any queries regarding your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Speak with Bankruptcy Gosford on 1300 795 575, or alternatively you can visit our website for further information: https://www.bankruptcy-gosford.com.au/