|January 12, 2018||Comments Closed|
Congratulations! You’ve successfully served your 3 year period of bankruptcy and have been discharged, so now what? You’ve certainly taken the right steps to settle your financial issues by filing for bankruptcy, and all your debts are well behind you now. Having said this, there’s still plenty of work required to get your finances back in order. The most challenging issue that discharged bankrupts confront is their opportunity to borrow money, and the main reason for this is their bad credit rating.
For the last 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 movement on your credit report, so an empty page will make financial institutions reluctant in lending money to you purely because they can’t ascertain your repayment habits. Rebuilding your credit history 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?
Due to the fact that financial institutions haven’t had the ability to ascertain your financial management skills for the last three years, you will need to start showing healthy financial habits. Here’s a list of ways in which you can do this
1. Stable employment
Obtaining steady and ongoing employment is an excellent way to increase your financial security and show lenders that you have a regular source of income. Stable employment will enable you to increase your savings and bolster 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 over time will show lenders that you are financially responsible and are capable of making loan repayments. By putting money into a specialised savings account every 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 recorded on your credit report, so too many credit applications can negatively impact your credit rating. After being discharged, it’s extremely important that you are pragmatic and careful about the kinds of credit you apply for to increase your chances of approval. It’s best to apply for a single line of credit at a time, and bear in mind 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 managed to save money during the course of your bankruptcy period, think about putting part of it into a term deposit account. Not only will you accrue interest and improve your overall financial situation, it will likewise show financial institutions that you are financially dependable. Subsequently, 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 kind of repayment on time. Whether it’s your rent, electricity, or even a secured loan in your name, making these repayments on time will undoubtedly improve your credit report and increase the confidence that loan providers have in your financial management capabilities.
6. Don’t be afraid to speak to lending institutions
If you wish to make an application for a line of credit after your bankruptcy period, or find out what types of options are available to you, don’t be reluctant to speak with lenders or other financial institutions to discuss your situation. They are in the best position to advise of your eligibility, and give suggestions on what options would work best for your individual circumstances.
Be careful with credit repair companies
There are plenty of credit repair companies that will make all kinds of promises to improve your credit record. 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 companies since they “may not always be able to do what they claim they can”.
If you’re in need of any guidance in rebuilding your credit report, or have any questions regarding your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Phone Bankruptcy Bendigo on 1300 818 575, or alternatively you can visit our website for more information: https://www.bankruptcy-bendigo.com.au/