|January 12, 2018||Comments Closed|
Congratulations! You’ve successfully served your three year period of bankruptcy and have been discharged, so what now? You’ve clearly taken the right measures to address your financial dilemmas by declaring bankruptcy, and all your debts are well behind you now. Bear in mind though, there’s still plenty of work involved to get your finances back on the right track. The greatest issue that discharged bankrupts experience is their opportunity to borrow money, and the main reason for this is their poor credit rating.
For the past 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 lenders hesitant in lending money to you solely because they can’t ascertain your repayment behaviours. Repairing your credit rating is the best way to get your finances back on track, and make your recovery process as smooth as possible.
How to repair your credit report after discharge?
Since lenders haven’t been able to review your financial management skills for the last 3 years, you need to start showing healthy financial habits. Here’s a list of ways in which you can do this
1. Reliable employment
Attaining steady and ongoing employment is an excellent way to increase your financial security and demonstrate to banks and financial institutions that you have a regular income source. Reliable employment will allow you to increase your savings and improve 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 illustrate to lending institutions that you are financially reliable 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 history.
3. Limit your credit applications
Whenever you request a line of credit, it is marked on your credit report, so too many credit applications can adversely impact your credit history. After being discharged, it’s integral that you are pragmatic and vigilant about the types of credit you apply for to increase your chances of approval. It’s best to apply for just one line of credit at once, 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 managed to save money during your bankruptcy period, contemplate putting some of it into a term deposit account. Not only will you accumulate interest and boost your overall financial position, it will also show loan providers that you are financially sensible. 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. Whether it’s your rent, electricity, or even a secured loan in your name, making these repayments on time will evidently improve your credit history and increase the confidence that financial institutions have in your financial management capabilities.
6. Don’t be afraid to talk with lenders
If you wish to make an application for a line of credit after your bankruptcy period, or identify what types of options are available to you, don’t be afraid to speak to lenders or other financial institutions to review your situation. They are in the best position to advise of your eligibility, and offer recommendations on what options would work best for your individual circumstances.
Beware of credit repair firms
There are loads of credit repair agencies that will make all sorts of promises to improve your credit record. Even though some of them are helpful in disbuting 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 help and support in repairing your credit report, or have any queries with respect to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Get in contact with Bankruptcy Tweed Coast on 1300 818 575, or alternatively you can visit our website for additional information: http://www.bankruptcy-tweedcoast.com.au/