|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 most appropriate steps to settle your financial challenges by filing for bankruptcy, and all your debts are well behind you now. Bear in mind though, there’s still a good deal of work involved to get your finances back on the right track. The biggest issue that discharged bankrupts encounter is their ability to borrow money, and the 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 next to your name. There’s been no movement on your credit report, so a blank page will make lenders reluctant in lending money to you solely because they can’t inspect your repayment habits. 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 lending institutions haven’t had the ability to inspect your financial management skills for the previous three years, you have to begin presenting healthy financial habits. Here’s a list of ways in which you can do this
1. Reliable employment
Achieving consistent and ongoing employment is an excellent way to boost your financial security and show banks and financial institutions that you have a regular income stream. Steady employment will enable 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 demonstrate to financial institutions that you are financially reliable 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
Whenever you make an application for a line of credit, it is documented on your credit history, so excessive credit applications can adversely impact your credit rating. After being discharged, it’s vital that you are practical and vigilant about the types of credit you apply for to increase the likelihood of approval. It’s best to make an application for a single line of credit at a time, and remember that secured loans and options with a guarantor or joint accounts will increase the probability of approval.
4. Contemplate a term deposit
If you’ve had the capacity to save money throughout your bankruptcy period, contemplate putting part of it into a term deposit account. Not only will you accrue interest and improve your overall financial circumstances, it will also show lenders that you are financially dependable. 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 kind of repayment on time. Whether or not it’s your rent, electricity, or even a secured loan in your name, making these repayments on time will definitely improve your credit rating and increase the confidence that financial institutions have in your financial management abilities.
6. Don’t hesitate to speak to lending institutions
If you intend to request a line of credit after your bankruptcy period, or uncover what types of options are available to you, don’t be afraid to speak with lenders or other financial institutions to review your circumstances. They are in the best position to advise of your eligibility, and provide insight on what options would work best for your personal circumstances.
Be careful with credit repair firms
There are lots of credit repair agencies that will make all kinds of promises to improve your credit record. Even though many 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 due to the fact that they “may not always be able to do what they claim they can”.
If you’re in need of any support in repairing your credit report, or have any queries concerning your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Contact Bankruptcy Penrith on 1300 818 575, or alternatively you can visit our website for further information: https://www.bankruptcy-penrith.com.au/