|January 12, 2018||0|
Congratulations! You’ve successfully fulfilled your 3 year period of bankruptcy and have been discharged, so now what? You’ve obviously taken the most appropriate measures to resolve your financial troubles by declaring bankruptcy, and all your debts are well behind you now. Bear in mind though, there’s still a lot of work required to get your finances back on the right track. The most significant issue that discharged bankrupts face is their capability to borrow money, and the 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 other than a bankruptcy mark against your name. There’s been no movement on your credit report, so a blank page will make banks and lenders reluctant in lending money to you simply because they can’t inspect your repayment behaviours. Repairing your credit history is the best way to get your finances back in order, and make your recovery process as smooth as possible.
Ways to rebuild your credit report after discharge?
Due to the fact that lending institutions haven’t been able to evaluate your financial management skills for the previous three years, you have to start presenting healthy financial habits. Here’s a list of ways in which you can do this
1. Regular employment
Achieving regular and ongoing employment is a terrific way to increase your financial security and demonstrate to lending institutions that you have a regular source of income. Regular employment will allow you to increase your savings and enhance your overall financial situation, leading to a better credit rating.
2. Increase your savings balance
Your savings account is an asset, so increasing your savings balance in time will show financial 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 history.
3. Limit your credit applications
Every time you apply for a line of credit, it is registered on your credit report, so too many credit applications can adversely impact your credit rating. After being discharged, it’s crucial that you are pragmatic and cautious about the kinds of credit you apply for to increase the likelihood of approval. It’s best to make an application for only one line of credit at a time, and remember that secured loans and options with a guarantor or joint accounts will increase the likelihood of approval.
4. Think about a term deposit
If you’ve had the opportunity to save money throughout your bankruptcy period, think about investing part of it into a term deposit account. Not only will you accrue interest and strengthen your overall financial position, it will likewise show loan providers that you are financially dependable. As a result, 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 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 most certainly improve your credit report and increase the confidence that lending institutions have in your financial management abilities.
6. Don’t hesitate to talk with loan providers
If you intend 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 hesitate to talk with lenders or other financial institutions to review your situation. They are in the best position to advise of your eligibility, and provide advice on what options would work best for your individual circumstances.
Be cautious of credit repair agencies
There are numerous credit repair agencies that will make all kinds of promises to improve your credit record. Although some of them are useful in challenging any incorrect listings on your credit history, 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 companies since they “may not always be able to do what they claim they can”.
If you require any assistance in rebuilding your credit report, or have any inquiries with respect to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Talk with Bankruptcy Fremantle on 1300 818 575, or alternatively you can visit our website for further information: http://www.bankruptcy-fremantle.com.au/