|January 12, 2018||Comments Closed|
Congratulations! You’ve successfully fulfilled your 3 year period of bankruptcy and have been discharged, so now what? You’ve unquestionably taken the appropriate measures to settle your financial difficulties 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 most significant issue that discharged bankrupts encounter is their ability to borrow money, and the main reason for this is their bad credit rating.
For the last 3 years, you’ve had no debts to pay back so your credit history has nothing to show besides a bankruptcy mark next to your name. There’s been no movement on your credit report, so a blank page will make financial institutions hesitant in lending money to you simply because they can’t evaluate 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 smooth as possible.
How to rebuild your credit report after discharge?
Since lending institutions haven’t been able to ascertain your financial management skills for the previous 3 years, you will want to start displaying healthy financial habits. Here’s a list of ways in which you can do this
1. Stable employment
Securing regular and ongoing employment is an excellent way to boost your financial security and demonstrate to financial institutions that you have a regular stream of income. Steady employment will allow you to increase your savings and improve your overall financial circumstances, resulting in a better credit rating.
2. Increase your savings balance
Your savings account is an asset, so increasing your savings balance gradually will display to loan providers that you are financially responsible and are capable of making loan repayments. By transferring 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 lots of credit applications can adversely affect your credit rating. After being discharged, it’s vital that you are sensible and careful about the kinds of credit you apply for to increase your chances of approval. It’s best to apply for only one line of credit at once, and always 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 managed to save money throughout your bankruptcy period, think about putting part of it into a term deposit account. Not only will you accumulate interest and enhance your overall financial situation, it will likewise show financial institutions that you are financially responsible. Therefore, 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 electricity, rent, or even a secured loan in your name, making these repayments on time will unquestionably improve your credit history and increase the confidence that financial institutions have in your financial management capabilities.
6. Don’t hesitate to talk to lending institutions
If you wish to apply for a line of credit after your bankruptcy period, or explore what types of options are available to you, don’t be afraid to speak to banks or other financial institutions to review your situation. They are in the best position to advise of your eligibility, and offer advice on what options would work best for your individual situation.
Be careful with credit repair companies
There are loads of credit repair companies that will make all sorts 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 record. The Government’s MoneySmart website (https://www.moneysmart.gov.au/) advises discharged bankrupts to be “very careful” of these firms since they “may not always be able to do what they claim they can”.
If you need any advice in rebuilding your credit report, or have any concerns about your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Speak with Bankruptcy Newcastle on 1300 795 575, or alternatively you can visit our website for further information: https://www.bankruptcy-newcastle.com.au/